The Emerging Markets are becoming more and more damaged by the effects of the strengthening of the US Dollar. Next to this, the trade war of Donald Trump is the second factor which is hurting Emerging Markets. Especially China got a significant blow by it.
The strengthening of the US Dollar is positive for commodity-rich economies like Russia. In May the Russian equities showed this by a gain of 4.5%. For labour-intensive economies like China and Pakistan the effect is the opposite.
We sold our position in mid and small cap equities in China. This to downsize our China exposure. Pakistan lost almost 4% during May.
Turkey got hit by the perfect storm. The uncertainty about the elections and the political future of Turkey in combination with the strong US Dollar resulted in a loss of more than 10% on the Turkish equities. This loss is mainly responsible for the fund overall result in May.
As said, we sold a large part of our position in Chinese Equities, next to this we also sold our Indian smaller equities position. Therefore our cash position went up to almost 18%. This cash position gives us the opportunity to make a comeback in the next months and to invest in discounted markets.