China continued to show resilience as equities surged 4.9% over the month, outperforming both emerging and developed market counterparts. Returns were supported by better-than-expected economic data and news of a 90-day extension to the US tariff pause. In manufacturing, China’s official PMI showed a slight improvement but remained in contractionary territory. Trade data painted a mixed picture as exports to the US plunged 33% in August, dragging overall growth to its weakest pace in six months, weighed down by Washington’s crackdown on transshipments and fading effects of earlier excess inventory stocking by US companies seeking to avoid the tariffs. Despite this slowdown, China’s export performance remains resilient, with exports recording a 4.4% year-on-year increase. 

India, by contrast, had a more challenging month. Headline inflation rose for the first time in nine months, climbing to 2.1% from July’s 1.6% print. However, inflation remains subdued and within the central bank’s target range, leaving room for further rate cuts. On the stock market, India’s bourse showed continued weakness following a punitive tariff imposed by the US which threatens to weigh on growth and corporate earnings. The rupee hit record lows, while foreign investors withdrew nearly $4 billion from the equity market. 

Elsewhere in Asia, weakness in technology shares dragged on Taiwan and Korea, both of which underperformed relative to peers. Still, the sector found a silver lining as several major semiconductor names gained from exemptions to the 100% import tariffs announced by President Trump, provided they committed to investing in the United States. 

In Latin America, Colombia, Chile and Brazil were standout performers, with the MSCI EM Latin America index surging by a robust 8.2% for the month. Brazil led the charge with the Bovespa recording strong gains, rising 9.6% for the month despite facing steep tariffs or the threat of further sanctions. Local currency strength, coupled with improving inflation dynamics, added momentum and strengthened expectations for looser monetary policy. At its meeting in early August, Mexico’s reserve bank moved to reduce its target overnight interbank interest rate by 25 basis points, citing soft inflation data and a more favourable economic outlook. 

Equities in the emerging Europe and Africa regions rose, broadly following global markets. Various Middle Eastern equities also edged up over the month; however, oil price volatility weighed on Kuwait and Saudi Arabia, tempering performance in these energy-dominated markets. Elsewhere, investor optimism was on full display in Egypt, where reforms, solid earnings and stronger investor confidence boosted performance.