In aggregate, international markets continued to chug along in August. The indicative MSCI index was up 3.54% for the month and up over 22.19% year-to-date. This performance exceeded that of their relevant U.S. index, which was up 1.9% for the month and 9.66% year-to-date.
Most regional indices also were in positive territory for the month, but constituent country performance varied widely. MSCI’s developed Europe index was up 3.45% for the month, but Denmark, led by Novo Nordisk, jumped 7.38%. In Ireland, where consumer sentiment remains lackluster, the equity market was up only 1.06%. The developed North American index was up 2.11%, but MSCI’s Canada index was up 5.52% – led by mining and financials companies.
In developed Asia, Japan reported better than expected 2nd quarter GDP growth led by net exports; MSCI’s representative index was up 6.96%. Their Singapore index, heavily weighted with financials, was up 7.07%. The index of economically challenged New Zealand, was actually down 0.34% for the month.
Among emerging markets, the Eastern European index was down 0.14% for August, but still up 51.75% year-to-date. Latin American markets did well – the MSCI index was up 8.30% for August. According to Americas Market Intelligence (AMI), Chile and Peru benefitted from copper prices and related projects; Colombia, from demographic driven economic growth; Brazil, from household spending and capex and Argentina, from a new IMF-supported program and a strong Peso. Despite tariff uncertainty and an IMF outlook downgrade, the Mexican index was up 3.21%.
Among other geopolitical issues, prospective tariffs did have an impact on investor sentiment on some Asian markets for August. The Indian index performance was – 2.21%; the Korean index, -1.87% and Taiwan, -0.8%. On the other hand, MSCI’s A-share index, which represents mainland China-based companies, was up 12.08%. Moderating trade tensions and heavy investments by Chinese households were credited for this strong performance.
The performance this year of various indices reinforces the ability of international equities to improve risk-adjusted returns to the U.S. investor. The variation among and within indices also demonstrates the importance of selectivity, which is a hallmark of your Bastion Fiduciary Portfolio Managers. As such, we will continue to incorporate macroeconomic outlooks, with company specific criteria and valuation as we carefully select stocks for our proprietary portfolios.
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