Emerging markets equities continued to suffer under pressure during the quarter.  There have been tough trade talks that took another step in the ‘wrong direction’ for investors, as the White House threatened another US$ 200 billions of sanctions on goods from China to the US. China answered back with its own set of sanctions.  This is having a negative impact on emerging markets in general. High energy prices have taken a beating on the Indian market and the currency has lost double-digit value on top of this.  Russian equities remain subdued as sanctions are stuck and it deters certain investors from participating.

In developed markets, three rate hikes this year in the US indicate that Europe is next and the low cost of capital is a bye-gone.  US tax cuts earlier continue to fuel investors’ appetite for domestic stocks and this is reflected in the returns generated by US equities, which have been phenomenal in the last few years.

Developed markets accounted for approximately 54% of the portfolio at quarter-end whilst emerging markets accounted for approximately 46%. The cash allocation was negligible.

Domicile: Malta Source: Bloomberg

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