International Report: Q2 2021

The Q1 2021 Global X International Report can be viewed here. The report summarizes market and macroeconomic developments across our International Access suite of ETFs. For a closer look at China Sectors, please see the latest China Sector Report: Q2 2021.

Summary

International equities generally performed well in Q2 after mixed results in Q1. The transition towards the New Normal Economy (NNE) in Europe and North America became a major tailwind for growth in Q2. Vaccination campaigns allowed for the relaxation of social distancing and mask requirements in Europe and North America. Some countries in Europe, like Greece, even took the bold step of re-opening borders for international tourists. Nevertheless, uncertainty lingers as the Delta variant spreads globally. The defining question for Q3 is whether variants will hinder the global community’s march towards the NNE.

The US-based S&P 500 performed above the MSCI All Country World Index (ACWI), with returns of 8.17% against 7.39% for the MSCI ACWI. Emerging markets delivered positive returns but still underperformed the ACWI by 2.34%. Two of Global X’s single country and regional funds outperformed the ACWI index, while ten underperformed it.

Source: Bloomberg as of Jun 30, 2021.

Performance is based on the NAVs of the ETFs. Performance shown is past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted.  

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Returns for periods greater than one year are annualized. For performance data current to the most recent month end, please click on the fund links below.

Notable Performers

The Global X FTSE Nordic Region ETF (GXF) was the top performer in Q2, with returns of 9.01%. These returns were supported by a stronger than expected macroeconomic recovery in the Nordic region. 2021 GDP growth estimates for Sweden, Denmark and Norway were all revised upwards in Q2.1 Overall, attitudes toward the economy in the Nordic region have become much more optimistic compared to 2020; 86% of people in Sweden and 69% of people in the Netherlands believe their country’s economic situation is good in 2021, compared to 29% in the US, 26% in France, 44% in the UK and 60% in Germany.2

The second top performer of Q2 was the Global X MSCI Argentina ETF (ARGT), which posted gains of 7.73%. After three years of recession, including a precipitous decline of -9.96% in 2020, Argentina is expected to achieve a growth rate of 5.84% in 2021.3 This can partly be attributed to rising agricultural commodity prices, which Argentina should benefit from because it is the largest exporter of soy products.4

Laggards

The worst performer of Q2 2021 was the Global X MSCI Colombia ETF (GXG) which recorded a -2.15% decline. Colombia’s unfavorable environment persisted throughout Q2. Protests rocked the country as the government struggled to put out a tax reform plan with popular support. The concerning rise in Colombia’s debt along with the government’s difficulties in passing a tax reform bill in Q2 culminated in Fitch downgrading Colombia on the first day of Q3.5

Meanwhile, the Global X FTSE Southeast Asia ETF (ASEA) underperformed with returns of -1.83%. A resurgence of COVID cases proved to be a nuisance in Southeast Asia, even in countries like Vietnam that responded well at the outset of the pandemic. Outbreaks of COVID delayed Singapore’s plans to open a travel bubble with Hong Kong and have cast doubt over Thailand’s plans to fully reopen to vaccinated tourists in Q3.

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