July 2021: a good start to the second half of the year

05 August 2021 | 2 min. readingtime

July was again a good month for most asset classes. The main exceptions were Asian equities and emerging markets. European listed property was a positive outlier.

Upward trend

Global equity markets continued their upward trend of recent months in July, which also meant new record highs in any event for US equity market indices. The MSCI North America index achieved a monthly yield of 2.4% in July. European equity markets lagged slightly behind, with the MSCI Europe index posting a monthly yield of 1.9%. Nevertheless, the Dutch AEX index for example breached the 750-point mark and climbed to an all-time high. Asian and emerging market equities fared less well, with monthly yields of -4.8% for the MSCI Asia Pacific index and -6.6% for the MSCI Emerging Markets index.

In emerging markets, however, Asian equity markets were not the only laggards.

Iwan Peters Senior Investment Strategist

The main culprit in July was a fear of growing government interference in Chinese tech companies, which adversely affected not only Chinese equities but also other Asian equity markets. In emerging markets, however, Asian equity markets were not the only laggards. Equity markets in Latin America also performed poorly, mostly due, it seems, to lagging vaccination rates in emerging markets and a growing fear of US rate hikes. The latter development is particularly bad news for countries with large US dollar-denominated public debts. The prospect of possibly higher interest rates in the US, combined with the strong US economy, has so far contributed to a strengthening of the US dollar against the euro of over 3% in 2021.

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Iwan Peters

Senior investment strategist

As an investment strategist, Iwan focuses on financial market analysis from a macroeconomic perspective, tactical asset allocation and economic scenario analysis.

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