Group 1 - The core viewpoint of the article is that emerging markets are demonstrating resilience similar to that of developed markets [1] Group 2 - Goldman Sachs highlights the robust performance of emerging markets in the face of economic challenges [1]

Core Viewpoint - MSCI is seeking feedback on the potential reclassification of Greece from emerging market status to developed market status, aiming for implementation during the August index review [1] Group 1 - MSCI states that recent feedback from international institutional investors supports the decision to exempt Greece from size and liquidity sustainability rules [1] - Investors view the EU as a highly integrated economic and financial group, making the differential treatment of Greece's market classification appear inconsistent [1]

Market Performance - Emerging markets continued to rise, with MSCI Global up by 1.9%, MSCI Developed up by 1.3%, and MSCI Emerging up by 6.8%[9] - The Hang Seng Index showed the best performance among emerging markets, increasing by 4.0%[9] - The 10Y U.S. Treasury yield rose significantly, indicating a shift in bond market dynamics[9] Investor Sentiment - Trading volume in the Chinese stock market surged, with the Shanghai Composite Index trading 4.054 billion shares worth $9.94 billion, a week-on-week increase[24] - The short-selling ratio in Hong Kong fell to 12.9%, below the 10-year average, indicating heightened investor confidence[24] Earnings Expectations - U.S. earnings expectations for 2025 were revised upward, with the S&P 500's EPS forecast increasing from +10.3% to +10.4%[68] - The Hang Seng Index's EPS forecast for 2025 was downgraded from -1.8% to -1.9%[68] - European earnings expectations remained stable, with the STOXX50 index's EPS forecast unchanged at -4.6%[69] Economic Outlook - The U.S. economic surprise index rose, influenced by lower-than-expected CPI data and uncertainties regarding the new Federal Reserve chair[9] - The Chinese economic surprise index also increased, supported by the central bank's monetary policy adjustments[9] Capital Flows - Global liquidity showed signs of tightening, with expectations for the Federal Reserve to cut rates decreasing slightly to 1.8 times in 2026[56] - Recent capital inflows into Hong Kong amounted to HKD 240 billion, with significant contributions from the Stock Connect program[65]

Market Performance - Emerging markets continued to lead, with MSCI Global up by 1.5%, MSCI Developed Markets up by 1.1%, and MSCI Emerging Markets up by 4.2% [8][12] - In the developed markets, the South Korean Composite Index showed the strongest performance with an increase of 11.1%, while the Australian S&P 200 was the weakest, declining by 0.5% [8][12] - In the emerging markets, the Shanghai Composite Index performed best with a rise of 4.0%, while the Indian Sensex30 was the weakest, falling by 1.7% [8][12] Trading Sentiment - The volatility of major stock indices continued to rise, with trading volumes in various markets increasing significantly [25] - In Hong Kong, the short-selling ratio decreased to 14.7%, indicating a high investor sentiment, while North American sentiment remained at a historical high with the NAAIM manager exposure index rising to 97.7% [25][28] Earnings Expectations - The overall earnings expectations for Hong Kong stocks were revised downwards, with the Hang Seng Index's 2025 EPS forecast adjusted from 2072 to 2071 [71] - In contrast, Japanese stocks saw an upward revision in earnings expectations, with the Nikkei 225's 2025 EPS forecast increased from 2447 to 2451 [71][72] - The earnings expectations for the S&P 500 remained stable at 273, while the Eurozone STOXX50's forecast was revised down from 332 to 331 [71][72] Economic Expectations - Economic indicators showed a slight decline in the US and China, with the Citigroup Economic Surprise Index for the US decreasing due to mixed non-farm data and political uncertainties [8][71] - The Eurozone's Economic Surprise Index saw a slight increase, influenced by easing geopolitical tensions and changes in trade policies [8][71] Fund Flows - The probability of a Federal Reserve rate cut in January was significantly reduced, with market expectations for 2.1 rate cuts in 2026, a slight decrease from the previous week [58][59] - Global liquidity showed signs of tightening, with significant inflows into Hong Kong stocks, amounting to 167 billion HKD, despite some outflows from stable foreign capital [68][70]

Market Performance - Developed markets outperformed last week, with MSCI Global index unchanged at +0.0%, MSCI Developed Markets up +0.2%, and MSCI Emerging Markets down -1.5% [1] - In the bond market, long-term rates in Japan increased while U.S. rates decreased [1] - In commodities, silver saw significant gains while soybean prices dropped [1] - The Chinese stock market saw gains in essential consumption, finance, and energy materials, while U.S. stocks in consumer discretionary and technology performed well [1] Trading Sentiment - There was a significant increase in trading volume for U.S. and European stock indices, while Hong Kong and A-shares saw weaker trading volumes [1] - Investor sentiment in Hong Kong decreased and is at historically low levels, while U.S. investor sentiment increased and is at historically high levels [1] - Volatility decreased for Hong Kong, European, and U.S. stocks, while Japanese stocks experienced an increase in volatility [1] - Overall valuation for developed markets rose compared to the previous week, while emerging markets saw a decline in valuation [1] Earnings Expectations - Hong Kong's earnings expectations were slightly revised upward, with the Hang Seng Index's 2025 EPS forecast adjusted from 2064 to 2065 [2] - U.S. earnings expectations remained stable, with the S&P 500 Index's 2025 EPS forecast at 273 [2] - European earnings expectations also remained stable, with the Eurozone STOXX 50 Index's 2025 EPS forecast unchanged at 330 [2] Economic Expectations - Economic sentiment in major markets declined to varying degrees last week [2] - The Citigroup U.S. Economic Surprise Index decreased, influenced by the Federal Reserve's cautious stance on future rate cuts, lower inflation data, and disappointing employment figures [2] - The European Economic Surprise Index also saw a slight decline due to falling consumer confidence and geopolitical tensions [2] - The Citigroup China Economic Surprise Index dropped, affected by disappointing macro data and tightening external conditions [2] Capital Flows - The Federal Reserve's cautious stance on rate cuts for 2026 was noted, with expectations of approximately two rate cuts remaining unchanged from the previous week [3] - Dollar liquidity tightened last week, with the SOFR-OIS spread widening [3] - Global micro liquidity saw significant inflows into China, the U.S., Japan, India, and South Korea, while flexible foreign capital flowed into Hong Kong stocks [3]

Core Viewpoint - The Warsaw Stock Exchange plans to abandon its emerging market status and upgrade to a developed market within three to five years [1] Group 1 - The CEO of the Warsaw Stock Exchange announced the strategic shift towards developed market status [1] - The transition is expected to take place over a period of three to five years [1]

Core Points - The South Korean government is planning to extend the foreign exchange market to 24 hours and relax restrictions on non-resident transactions in Korean won, aiming to enhance market access for foreign investors [1] - President Lee Jae-myung emphasized the commitment to improving market transparency, corporate governance, and reducing geopolitical risks during a global investor relations event in New York [1] - The upcoming legislative changes are intended to eliminate structural barriers in the foreign exchange market, which are seen as necessary for South Korea's inclusion in the MSCI developed market index [1][2] Group 1 - The South Korean Ministry of Finance is set to implement 24-hour trading in the foreign exchange market next year [1] - The government aims to ensure that foreign investors can benefit from the "Korean premium" [1] - Structural barriers in the foreign exchange market are currently limiting non-resident transactions due to reporting obligations and regulatory restrictions [1] Group 2 - MSCI has stated that South Korea must achieve full currency convertibility to be classified as a developed market [2] - The report highlights the need to abolish capital controls and establish deeper, more active onshore and offshore markets [2] - Key characteristics of developed foreign exchange markets include broad participation from global investors, real-time price transparency, and a reliable settlement system [2]

Group 1 - iShares Core MSCI Emerging Markets ETF attracted $5.8 billion in capital over four months following the "liberation day" policy announcement, with a 5.8% increase in assets, outperforming the 3.3% growth of the Vanguard developed markets ETF [2] - Emerging market policymakers have demonstrated market discipline, maintaining sustainable debt levels compared to developed markets, with countries like Brazil and India having sovereign debt to GDP ratios lower by 15-20 percentage points than G7 nations [2] - Emerging markets have made significant progress in financial deepening, industrial upgrading, and institutional optimization over the past decade, with Vietnam's manufacturing value-added to GDP rising to 25%, an 8 percentage point increase since 2015 [2] Group 2 - The expectation of Federal Reserve interest rate cuts has led to a weakening dollar index, creating a favorable environment for the revaluation of emerging market assets [3] - Emerging market stocks have shown a median excess return of 8%-10% relative to developed markets during periods of dollar decline, with the performance gap between emerging and developed market indices widening to 5% for the 2024-2025 cycle [3] - Institutional investors are reassessing emerging markets, with current risk premiums for emerging market stocks exceeding those of developed markets by 150 basis points, compared to a historical average of 100 basis points [3]

Group 1 - Emerging markets are gaining strong momentum as traditional boundaries with developed markets fade, presenting compelling investment opportunities in fixed income [1] - Emerging market assets, including sovereign credit, local currency bonds, and equities, are outperforming developed markets due to a weaker dollar and stronger emerging market currencies [1] - The tightening of U.S. credit spreads and declining U.S. Treasury yields are crucial for the continued strength of emerging market spreads and local bond performance [1] Group 2 - The credibility of emerging market central banks has improved post-COVID, demonstrating their ability to act independently and effectively in the face of shocks [2] - Fiscal conditions remain imbalanced, with developed markets still holding advantages in fiscal capacity, credibility, and lower currency risk [2] - Despite increasing cross-border capital inflows into emerging markets, global positioning remains cautious, with most investors maintaining moderate exposure to emerging market fixed income [2] Group 3 - Morgan Stanley is optimistic about local bonds in Brazil, Colombia, Hungary, and Turkey, as well as certain sovereign credits in Chile, Guatemala, Mexico, Morocco, South Africa, and Zambia [2]

Core Insights - HSBC's quarterly survey indicates that investor optimism towards emerging markets has reached its highest level in over two years, with approximately 44% of respondents expressing a positive outlook for the next three months [1] - This optimism marks an increase from 36% in March, representing the highest level since March 2023 [1] - The survey encompasses funds managing a total of $414 billion in assets within emerging markets [1] - HSBC economist Murat Ulgen states that the consensus remains that emerging market equities are expected to outperform developed market equities in the coming months [1]