The strong dollar, surging inflation and China’s Covid woes have presented a big challenge for stocks in developing countries in 2022 but some emerging markets have performed well.

Data from Refinitiv shows 24 MSCI emerging markets indices have generated a return of 2.1% in 2022 on a non-weighted average basis.

The headline MSCI Emerging Markets index is down more than 20% though thanks to the extremely weak performance of the Chinese market, which has a dominant weighting.

Investors will be hoping China is now at an inflection point as it readies for a relaxation of Covid rules next spring.

The standout performer is Turkey which has bounced back strongly this year. Domestic investors have been piling into Turkish stocks as a way of beating inflation and the country’s central bank has bucked the global trend by reducing interest rates despite surging prices. Valuations were also cheap after a long period of underperformance.

Of the larger emerging markets, India stands out. Indian shares reached all-time highs in early December, supported by a resilient economy, financial reforms and an administration which is perceived as being increasingly pro-business.

Apart from China, other markets which struggled included those exposed to geopolitical risks with tensions over Taiwan, and Beijing’s claims to it, mounting. Hungary and Poland suffered thanks to their close proximity to the Ukrainian conflict and acute exposure to surging energy prices.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit here

‹ Previous2022-12-22Next ›