SOURCE: Russell Investments

Russell Investments

July 11, 2013 09:56 ET

Arab Spring Redux: Russell Emerging Markets Index Down More Than -7% Year-to-Date and Nearly -1% in July as of 7/8 Amid Growing Regional Political Instability and Slowing Growth in China

SEATTLE, WA--(Marketwired - Jul 11, 2013) -  The Russell Emerging Markets Index is down (-7.3%) year-to-date as of July 8th amid growing political instability in various emerging market countries and further indications of slowing growth in China. This compares to a 19.2% return for the Russell 3000® Index, a 7.1% return for the Russell Developed ex-U.S. Index and a 6.2% return for the Russell Developed Europe Index for the same time period. The Russell Emerging Markets Index was also negative for more recent time periods, with a (-8.4%) return for the second quarter and a (-0.8%) return for July month-to-date as of July 8th.

Additional Points-of-Interest:

  • The Russell BRIC (Brazil, Russia, India, China) Index is down (-11.3%) year-to-date as of July 8th, compared to a (-7.3%) return for the Russell Emerging Markets Index and a +19.2% return for the Russell 3000 Index.
  • The United Arab Emirates (UAE) (+46%), the Philippines (+8.1%) and Malaysia (+8.1%) were the top performing country constituents within the Russell Emerging Markets Index year-to-date as of July 8th, while Brazil (-21%), Greece (-16.6%) and South Africa (-15.1%) were the bottom performers for this same time period.
  • Greece, the newest country constituent addition to the Russell Emerging Markets Index, was the bottom performer within the Index for July month-to-date, with a (-6.5%) return.
  • Interestingly, Egypt, in which recent public riots have led to the ousting of president Mohammed Morsi, has a +14.8% return for July month-to-date as of July 8th.

"Emerging markets performance has suffered year-to-date relative to developed markets globally. The BRIC (Brazil, Russia, India & China) nations, which are large constituents in the Russell Emerging Markets Index, have faced challenges, notably more mixed economic data out of China where the new political regime looks to establish credibility. And public rioting in Turkey, Brazil and, most recently, Egypt, have contributed to more volatility in these markets," said Gustavo Galindo, emerging markets portfolio manager for Russell Investments. "While emerging markets can present additional risks not found in developed markets, it is important to remember the important role these markets can play within a multi-asset portfolio from a diversification and return perspective. When you are seeking long-term exposure to emerging markets, it is important to work with a global asset manager with the insight and capabilities to help you evaluate these opportunities and put them into a broader multi-asset portfolio context."

Russell Indexes Performance
Index / Index Country   July MTD as of July 8th   2nd Quarter 2013   2013 YTD as of July 8th
Russell 3000 Index   3.1%   1.4%   19.2%
Russell Developed ex-US Index   1.9%   -2.7%   7.1%
Russell Developed Europe Index   1.2%   -1.0%   6.2%
Russell BRIC Index   -1.1%   -10.4%   -11.3%
Russell Emerging Markets Index   -0.8%   -8.4%   -7.3%
United Arab Emirates   3.0%   12.3%   46.0%
Philippines   2.0%   -13.3%   8.1%
Malaysia   0.7%   4.9%   8.1%
Thailand   0.3%   -11.2%   6.8%
Indonesia   -3.9%   -6.6%   6.3%
Taiwan   0.9%   0.6%   4.7%
Mexico   1.0%   -12.6%   -2.4%
China   0.1%   -5.9%   -5.9%
Egypt   14.8%   -11.1%   -6.9%
India   0.1%   -7.8%   -9.3%
Turkey   -4.5%   -15.4%   -9.7%
Poland   1.2%   -4.5%   -11.1%
Russia   0.9%   -10.7%   -11.1%
Korea   -0.9%   -9.9%   -11.2%
Chile   -3.7%   -15.4%   -12.1%
Colombia   0.0%   -12.2%   -14.7%
South Africa   -2.9%   -7.8%   -15.1%
Greece   -6.5%   -8.3%   -16.6%
Brazil   -5.2%   -18.5%   -21.0%

Source: Russell Investments. Returns are euro-denominated.

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index. Index returns are presented in euro-denominated terms. 

Russell Emerging Markets Index country constituents Hungary, the Czech Republic, Peru and Morocco had less than 10 constituents or constituents with more than 30% weight in the index so were not included in the Individual breakdown. 

Opinions expressed by Mr. Galindo reflect market performance and observations as of July 8th, 2013 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance.

The Russell Global Index includes more than 10,000 securities in 48 countries and covers 98% of the investable global market. All securities in the index are classified according to size, region, country and sector. Daily Returns for the main components are available here:

Investments in emerging or developing markets involve exposure to economic structures that are generally less diverse and mature, and to political systems which can be expected to have less stability than those of more developed countries. Securities may be less liquid and more volatile than US and longer-established non-US markets.

Russell Investment Group is a Washington, USA Corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.