Currencies, countries and sectors: Taking apart the emerging markets rally

Raman Aylur Subramanian, head of equity applied research at MSCI, analyses the opportunities different emerging market countries have offered investors in the recent rally and how a handful of sectors have been key to the region's outperformance.

Apart from a recent swoon spurred by fears the US Federal Reserve could raise rates, it was a summer of love for investments in emerging markets. The MSCI Emerging Markets index ended August up 15% for the year, after losing 20% in 2015. Compared with other rallies of recent years, much of the latest one has skirted China. Brazil (up 62% to 31 August), Taiwan (up 18%), South Africa (up 16%) and India (8%) - to cite four countries that have contributed to the rally - have performed well, but each has done so for different reasons. The disparity highlights the differences among the 2...