Last week the MSCI All Country World Index (ACWI) returned +0.8% in GBP terms, underpinned by a strong week from Europe equities, Japanese equities and the FTSE All Share Index.
Political tensions have increased significantly in Afghanistan as the US-backed President Ashraf Ghani fled the country as the Taliban seized control of the capital. In what is the longest war in America’s history, the focus is now on allowing Afghans and embassy staff to evacuate the country before the civil unrest escalates. It was expected that Taliban forces would take up to 90 days to seize control of the capital Kabul, however they managed to do so in a much shorter time frame. The Pentagon declared a further 1000 troops would be deployed in addition to the 5000 troops that President Biden announced in a bid to facilitate the evacuation of key personnel back to the US.
Elsewhere, the political backdrop has shifted in China where the government is set to operate with greater regulation over its national security and technology. China’s State Council and the Communist Party’s Central Committee issued a 10-point plan which outlines its plans to reduce monopoly power, with the likes of Alibaba and Tencent having taken dominant market positions. Most recently, Alibaba accepted a record £2 billion fine for abusing its market position. China forms 34.6% of the MSCI Emerging Markets Index with MSCI China returning -11.9% in GBP terms year to date following the clampdown from government forces. This has been one of the major reasons for emerging markets underperformance relative to the wider global equity universe where MSCI All Country World Index (ACWI) has returned +16.3% in GBP terms.
