GTC Trendline – Third Quarter 2021
Overview
The global developed equity market, represented by the MSCI World Index, sold off some 4% in USD in September giving up all gains earned in July and August. This ended seven consecutive months of gains from this index. While coming in flat at -0.01%, this developed market fared substantially better than the overall emerging market (MSCI Emerging Market Index) which retracted -8.1% over the quarter amid significant Chinese headwinds and inflation concerns.
The September downturn and sell-off in all three of these equity markets can largely be attributed to the more hawkish stance of central banks and their concerns of deepening inflation, sluggish economic recovery, and tightening Chinese regulation.
Severe cash-flow concerns at China’s second largest property developer, Evergrande, triggered global liquidity concerns and raised questions about the health of the Chinese economy.
China’s decision to further curb their gaming sector added to investor uncertainty, especially after the alarming ramifications of their EdTech regulation changes.
The local equity market, as represented by the Capped Swix Index outperformed both developed and emerging markets in base currencies over the quarter, returned +3.2%.
