The decline exceeded that of developed markets, with the MSCI World Index slipping a comparatively modest 0.7%. Zooming out, however, EM’s quarter-to-date picture remained considerably stronger, returning 24.1%, well ahead of the 9.9% gain recorded by developed markets over the same period. Returns within EM varied widely by region, with performance concentrated in technology-led and domestically resilient markets. 

Asia ended the month in negative territory overall but remained a relative bright spot within EM. Taiwan continued to lead, with the MSCI Taiwan Index gaining 1.3% (62.6% year-to-date) supported by sustained demand for AI infrastructure and semiconductors. Korea was broadly flat, as gains in AI-related names were offset by profit-taking elsewhere in the semiconductor supply chain, underscoring the narrow and rotational AI-driven market leadership. 

Hong Kong was among the weakest major markets, with the Hang Seng Index falling 8.6%. The broader MSCI China Index fell by 7.1% as the technology sell-off weighed on heavyweight internet and AI-linked stocks. In contrast, mainland China proved more resilient, with the CSI 300 Index rising 2.3% in CNY terms, supported by an improvement in factory activity.  

China’s official PMI increased to 50.3 in June, beating expectations on the back of stronger high-tech manufacturing, although weak consumer demand and the property sector continued to weigh on the broader economy. China also left its benchmark lending rates unchanged for a 13th consecutive month, signalling that policymakers remained in a holding pattern despite the improvement in manufacturing activity. 

India stood out for its resilience, underpinned by robust domestic growth momentum and continued infrastructure investment. This helped the market hold up better than several regional peers despite a global backdrop of interest rate uncertainty and elevated oil prices. Singapore and Thailand also advanced on resilient activity and export demand, while Indonesia underperformed amid currency weakness and capital outflows. 

Returns were mixed across the Middle East. Tensions surrounding the Strait of Hormuz and broader geopolitical uncertainty drove considerable volatility in oil prices during the month. Higher energy prices offered some support to commodity-exporting markets but concerns about potential supply disruptions and their knock-on effects for global growth capped broader risk appetite. 

Latin America was the weakest-performing region during the month. Argentina underperformed most sharply, while Mexico and Brazil also declined as investors reassessed growth, inflation and monetary policy expectations. Chile proved more resilient, supported by firmer copper prices however, this was insufficient to lift regional performance.