Bargain hunting, diversification and opportunity continued to drive interest in international equity markets in the third quarter of 2025. The MSCI ACWI ex USA index was up 7.03% for the quarter and 26.64% for the year through the third quarter (year-to-date). MSCI’s relevant US index was up 8.12% and 14.97% year-to-date.
Among developed markets, the Far East did especially well in the third quarter. Investors appreciated improved corporate governance and moderate inflation data in Japan, which is the index’s largest market. The best performing market, however, was Hong Kong, which hosted a surge of mainland China IPOs. MSCI’s developed Far East index was up 8.29% for the quarter and 22.52% year-to-date.
MSCI’s European developed index was up 3.66% for the quarter. In Europe’s largest market, a weaker pound enhanced UK- based multinational companies and the FTSE 100 reached a record high on September 30th. Meanwhile, a steepening yield curve and improving growth prospects led to good returns for European financials in general. According to MSCI, Novo Nordisk-heavy Denmark, was the only market in negative territory for the previous nine months. Year-to-date, their developed Europe index was up 28.22%.
MSCI’s Emerging Market index was up 10.95% for the quarter. Their Frontier Markets Africa Index, dominated by Morocco, which reached an all-time high in September, returned an impressive 19.09% for the quarter. The EM Far East Index was up 16.5% for the quarter led by its two largest holdings – Taiwan Semiconductor Manufacturing and Hong Kong listed Tencent. Good fiscal policies, sustained investment inflows and robust currencies had generally positive impacts on countries in the MSCI Latin America index, which was up 10.31% for the quarter. On the other hand, pressure on the Indian tech sector due to the US announcement of higher H-1 B visa application fees, combined with rupee depreciation led to a -6.63 % return of the India index for the quarter. Year-to-date the EM index was up 28.22%.
For the nine months ending September, key performers in our international equity portfolios, good or bad, reflected many of the themes of the aforementioned markets. The shares of Brazil’s Banco Bradesco, UK insurance company Prudential PLC and French Bank PNB Paribas did very well in the Bastion Value International Equity Portfolio. India IT service providers Wipro and Infosys were significant detractors. Adidas signaling potential slower growth associated partially with tariffs also yielded negative returns.
In our International Equity Income Portfolio, British insurance company Lloyds and bank Barclays did very well as did French telecommunications provider Orange. Due to the direct or indirect impact of tariffs, spirits provider Diageo, electronics manufacturer Canon and packaging company Amcor underperformed.
Macroeconomics and geopolitics greatly influenced relative sector performance this year. Your portfolio managers will remain aware of the evolution of these factors going forward, but also will consider them in light of the opportunity for individual stocks based on their strategy, management and valuation.
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