Emerging Capital Markets Newsletter – 1Q25
Published on 27 May, 2025
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Emerging markets saw mixed performance in Q1 2025. China led with a 15% gain in the MSCI China Index, fueled by AI-driven optimism, while Brazil rose 12% on easing inflation. India lagged as investors rotated into China amid concerns over a cyclical slowdown and weak earnings. However, these gains were swiftly erased after Trump’s “Liberation Day� tariff announcement, triggering global market turmoil. As risk sentiment deteriorated, capital flows reversed and volatility spiked across emerging markets. While some stability has returned following a temporary pause in new tariffs, investor caution remains elevated, with near-term performance likely to hinge on geopolitical developments and policy clarity from major economies.