Uncertainty looms large: Emerging Equity Markets Monthly Wrap - July 2011 - JP Morgan

· Equities declined in July, driven by heightened uncertainty over the increase in US debt ceiling, European sovereign stress, and slowdown in Chinese economic growth. EM Asia was the best performing sub-region +0.3%. EMEA and LatAm declined 0.6% and 3.5% respectively (see page 7).

· Thailand, Peru and Philippines were the best performing markets in July. Mexico, Taiwan and South Africa were the worst performing markets. At the sector level, Consumer Staples and Telecoms (+0.7% each) were the best performing sectors. Industrials (-3.1%), Utilities (-2.5%) and IT (-1.7%) were the worst performers.

· The Japanese Yen and Aussie dollar were the best performing DM currencies in July, appreciating 5% and 2.5% respectively. The Philippines Peso (+2.8%), Malaysian Ringgit (+1.5%) and Korean Won (+1.4%) were the best performing EM currencies. The Turkish Lira and Hungarian Forint depreciated by 4% and 2% respectively.

· Gold gained 8.5% in the last month as investors sought safe havens amid heightened uncertainty surrounding the increase in US debt ceiling and fiscal stress in US and Europe. Brent gained 4.6% followed by industrial metals up 4% and agriculture up 3.3%.

· Total EM equity funds had inflows of US$1.4B in July. GEM and Asia ex equity funds had inflows of US$1.8B and US$740MM while EMEA and LatAm equity funds had outflows of US$558B and US$276MM respectively. Year to date total EM equity outflows are US$5.1B. EM fixed income has strong inflows of US$32.2B year to date.

· Source: Bloomberg, MSCI, 29 July 2011.