Carmignac Emergents

In November, Emerging markets tumbled, following Donald Trump’s election with a landslide victory for the Republican party bringing a wind of volatility to stock markets.

D. Trump victory has led to stronger USD that weighed on Emerging markets and growth sensitive sectors.

In China, markets have shown mixed signals, Hong Kong markets (H shares), penalized by concerns over Trump’s protectionist measures, while domestic markets (A shares) moved higher in the wake of encouraging macroeconomic data (Caixin Manufacturing PMI at 51.5 and retail sales up 4.8%)

The Brazilian markets were also weak, following disappointing fiscal announcement from government, causing uncertainty and nervousness among investors.

Against this backdrop, the Fund delivered a negative performance in November.

The Fund suffered from its exposure to Latin America, particularly Brazil, with declines in Eletrobras and Hapvida.

We also suffered from the weakness of our Chinese stocks, with JD.com, H world and Miniso falling over the month.

We did, however, benefit from the strong performance of pan-Asian eCommerce company Sea Ltd, which posted solid financial results with sales up 31% year-on-year.

Finally, our currency hedges on the Chinese yuan, paid off, making a positive contribution to performance in November.

While we remain constructive on emerging markets over the coming months, we believe that Trump's protectionist policies represent a risk for emerging markets.

For this reason, we are maintaining an overall cautious stance, with a measured allocation to China and an underweight positioning relative to our reference indicator. We have also implemented a hedge on the Chinese yuan, with our Chinese portfolio entirely hedged against thecurrency risk.

Against a backdrop of rising US yields, we have neutralised the Fund's growth bias by increasing our exposure to “value” stocks, i.e. companies trading at very attractive valuations despite their solid fundamentals (particularly in China).

In this respect, we initiated a new position in H World, China's second largest hotel chain, a beneficiary of the accelerating hotel consolidation in China after COVID. We financed this acquisition by reducing our holdings in Miniso and Beike.

We are continuing to strengthen our Indian portfolio. During the month, we participated to the IPO of Swiggy, India's leading online food delivery company.

More generally, we are maintaining a concentrated portfolio with balanced exposure, combining quality, high-visibility stocks (Asian tech stocks, India) with companies in less attractive markets, but whose valuations are clearly attractive (China).