Lazard's Equity Portfolio for Emerging Markets Quarterly Review for Q2 2025

In the second quarter of 2021, emerging markets equities saw a significant surge, with an approximate 8.1% increase[1]. This growth was primarily driven by improvements in currency dynamics, easing trade tensions, election-driven political prospects, and overall investor reallocation away from the US[1][4].

Latin America emerged as the best-performing region, with a 15.2% increase, followed by regions in Asia and Europe, the Middle East, and Africa (EMEA) with a 12.4% rise, and the area encompassing emerging Asia, the Middle East, and Africa (EMEA) with a 7.6% increase[1].

Stock markets in Brazil and Mexico rose sharply, despite concerns about domestic fiscal issues and US tariffs[2]. Shares of Totvs, a Brazil-based software company, advanced after reporting strong quarterly results, which showed an acceleration in the net annualized revenue added[3]. Meanwhile, Mexico's stock market benefited from a 90-day pause in the implementation of tariffs announced by the US[11].

In Asia, Korea's stock market saw significant growth, boosted by a recovery in the artificial intelligence trade[8]. Traders bid up shares of Taiwan Semiconductor Manufacturing Company (TSM) due to renewed investor interest in companies linked to artificial intelligence[9]. The stock price of Bizlink, a Taiwan-based wire harness maker, appreciated on signs of strong demand for its high-performance computing (HPC) products[9].

However, shares of Techtronic, a China-based power equipment manufacturer, traded lower on concerns that it would be adversely impacted by US tariffs on goods from China[5]. Similarly, Lenovo, a China-based personal computer and data center equipment maker, faltered due to potential US tariffs that could be added to its sales into the US market[10].

In the consumer discretionary and health care sectors, stock selection boosted the relative performance of the portfolio[7]. Shares of Alibaba fell due to concerns about the China-based e-commerce giant's earnings outlook, attributed to weak consumer spending amid the country’s economic woes and uncertainty over the impact of US tariffs[6]. Conversely, shares of MercadoLibre, the Uruguay-based e-commerce giant, climbed after reporting strong first-quarter results[12].

The Developing Markets Equity Portfolio outperformed its benchmark, the MSCI Emerging Markets Index, in the second quarter[13]. Greece, the Czech Republic, Poland, and Hungary saw sharp rises in their stock markets due to increased optimism about economic prospects and the possibility of a peace agreement between Russia and Ukraine[1].

In summary, the strong performance of emerging markets in Q2 2021 was a result of improved currency dynamics, easing trade tensions, election-driven political prospects, and overall investor reallocation away from the US. Latin America led the gains, followed by Asia and EMEA, while the US-China trade friction caused some volatility in China's stock market.

The government's focus on technology, particularly artificial intelligence, has stimulated growth in various stock markets, such as Korea's, where traders bid up shares of companies like Taiwan Semiconductor Manufacturing Company due to renewed investor interest.
In the real estate sector, increased optimism about economic prospects led to significant rises in the stock markets of countries like Greece, the Czech Republic, Poland, and Hungary.
While some sectors within emerging markets, like China's consumer discretionary sector, faced challenges due to factors like US tariffs and weak consumer spending, other sectors, such as health care in Uruguay, performed well, with the Uruguay-based e-commerce giant, MercadoLibre, reporting strong first-quarter results.
The focus on investment in emerging markets has led to substantial returns, with Latin America emerging as the best-performing region, followed by Asia and EMEA, and the Developing Markets Equity Portfolio outperforming its benchmark, the MSCI Emerging Markets Index, in the second quarter of 2021.