MSCI EM Index: Massive Decline in November Led by China

The MSCI Emerging Markets Index was all going up in the past ten months, even increasing by a whopping 7% in the month of September 2025, until the sudden sharp fall in November 2025. During the month, the MSCI EM index fell by 2.4% which is the first in the past ten months, and the highest decline in the past 12 months. Last year, for the corresponding month, that is, November 2024, the EM index dropped sharply by 3.7%. 

Factors Behind Declining MSCI EM Index

As per experts, there are different factors that are at play for the poor performance of the MSCI EM Index in the month of November’25. 

• It is the broad risk-off shift that is happening due to the uncertainty related to the interest-rate direction
• There is a heavy selloff across sectors, especially the technology-linked sectors
• Foreign Institutional Investors sold Asian equities worth US$22 billion in November, which further led to liquidity concerns. This is the second-biggest selloff by the FIIs in the past six years. 
• Weaker currency and economic growth are dragging the emerging markets down as well

Heavy Profit Booking 

The MSCI Emerging Markets decline is triggered by heavy profit booking, especially in the technology-led sectors. The reason is the excellent performance of these regions in the past months; however, with the uncertainty on the rise, the investors are now trying to book all the profits they can, which is dragging the market rapidly. 

China has been one of the major emerging markets that led the decline primarily due to its sluggish economy and declining consumption patterns in the economy. Apart from these, the property market slump in China also affected the overall market sentiments. Since it is a major constituent of the index, the effect has been magnified as well. 

Effect on Indian Markets 

India, being one of the most promising emerging markets in the world, is also highly affected by the market shifts. During the months, FIIs withdrew equities worth US$425 million from the markets, even though the domestic market was rebounding. Apart from the global market shifts, the premium valuation of the Indian equities and poor quarterly performances are also triggering the shift in the investments. 

What does it mean for the Investors?

Experts suggest that the current dip in the index and the overall market is setting up the stage right for FY27. With the decline, the valuation can come down to a bit reasonable level, which can help the investors find out more opportunities in these emerging markets. However, the market sentiments are highly dependent on the rate cut decisions both in the US and back home in India. 

Source: https://www.moneycontrol.com

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