Global Insights 1

GLOBAL Larry Adam, Chief Investment Officer

INSIGHTS Pavel Molchanov, Senior Investment Strategist Nicholas Schiavone, Investment Strategy Analyst Follow Larry on Linkedin or on Our Views • We favor US equities over international developed equities. • Our favorite sectors in the US are Info Tech, Health Care, Industrials, and Consumer Discretionary. • Among international markets, we favor Japan and EM Asia over the euro zone, the UK, and Latin America.

DEVELOPED MARKETS EMERGING MARKETS

US Euro Zone EM Asia Overweight Underweight Overweight

• The S&P 500 is up 9.0% YTD, though down • MSCI Europe is up 8.1% YTD in USD terms • MSCI China is down 10.7% YTD in USD slightly from its record high set in June and is underperforming the S&P 500 by terms, with manufacturing overcapacity amid some profit-taking in tech stocks. ~1%, reflecting currency headwinds. offsetting strong exports.

• Energy and Real Estate are the top-gaining • After being approved by the European • China’s CPI cooled in June to 1.0%, sectors YTD, while Consumer Discretionary Parliament and member states, the US-EU remaining the lowest among the G20 and Comm. Services are at the bottom. trade deal officially took effect. economies.

• After setting a three-year high of 4.2% in • Following the ECB’s 25 bps hike in June, the • Despite Korea’s recent reforms to improve May, the CPI cooled in June to 3.5%, with policy rate remained unchanged at the July foreign investor access, MSCI maintained core inflation ticking down to 2.6%. 22-23 meeting. its index status as an emerging market.

• Boosted by the Fed’s hawkish tilt in June, • The euro is down 3.1% YTD, weighed down • MSCI India is down 11.6% YTD in USD the US Dollar Index is up 3.2% YTD and by Germany’s industrial sluggishness and terms, as low inflation and robust GDP near the midpoint of its ten-year range. France’s political instability. have been offset by currency weakness.

Japan UK LatAm Overweight Underweight Neutral

• MSCI Japan is up 14.3% YTD in USD terms, • UK equities are outperforming the euro • MSCI LatAm is among the better fueled by solid earnings growth and zone and the US on a YTD basis. MSCI UK is performers YTD, up 13.9% in USD terms, expectations for more fiscal stimulus. up 9.4% in USD terms. boosted by Energy and currency tailwinds.

• The cabinet unveiled a plan for $2.3 trillion • After Keir Starmer’s resignation, fellow • The White House formally announced its of capex over the next 14 years—nearly Labour Party MP Andy Burnham took office intention to renegotiate the USMCA trade one-third is allocated to AI and chips. as the seventh prime minister since 2016. deal with Mexico and Canada.

• Following a 25 bp rate hike in June to a 31- • Markets expect the BOE to hold steady on • South America’s Mercosur trade bloc and year high, markets expect the BOJ to hold July 30 but point to a ~35% probability of a Japan launched negotiations aimed at an steady at the July 30-31 meeting. rate hike by year-end. economic partnership agreement.

• Despite several boosts from government • Having followed a more bullish trajectory • Argentina’s CPI ticked up in June to a ten- intervention, the yen is down 4.3% YTD to over the past six months than the euro, the month high of 33.5%—the highest among its lowest level since 1986. pound is down 0.9% YTD. the G20 economies.

Source: FactSet. Data as of 7/24/2026. 1

In the Spotlight South Korea Has The World’s Eighth Largest Stock Market—Why Is It Still An EM?

With a gain of ~68% (in USD terms), South Korea, as measured by the MSCI Korea Index, stands as KEY TAKEAWAYS the world's best-performing major equity market YTD. Fueled by the Technology sector, this remarkable rally briefly elevated Korea to the world's fifth-largest stock market. After recent profit- Computers And Semiconductors Are taking, Korea ranks #8—still ahead of France and Germany—with an aggregate market cap of ~$3.5 Driving South Korea’s Export Boom trillion. While investors have plenty to celebrate, a few cautionary notes are warranted. Despite its tech leadership, Korea is classified as an emerging market, and the Korean won has weakened MSCI Korea’s Tech Weighting Is ~74%— against the US dollar. Perhaps…