Investor excitement for IT drives strong performance in Emerging Markets

Investors’ appetite for the information technology (IT) sector has driven strong performance in Emerging Market (EM) equities this year, NN Investment Partners says.

Analysis* by NN IP shows that IT is now the largest sector in the MSCI Emerging Markets Index, accounting for 27% of it versus 10% in 2007.

Maarten-Jan Bakkum, Senior Emerging Markets Strategist, commented: “EM equities have been performing well during the whole of 2017, driven by less concern about Trump protectionism, specific strength in Chinese and Asian IT and the ongoing improvements in EM growth momentum. The latter two factors prevented a big sell-off in June, when investors became more worried about monetary policy tightening in Europe and the US.

“Apart from changing expectations about monetary policy and improving economic growth, EM equities have also benefited from investor excitement about the IT sector this year. Globally, IT has been hot, but particularly in China the sector has been performing very well.”

*Source: NN IP analysis of Datastream data, July 2017