The third quarter of 2021 was choppy with waves of negative news from China, talks about policy normalisation and the resurgence of Covid-19 in the northern hemisphere suppressing investor sentiment. The bond-equity hedge collapsed as both asset classes ended in the red at a global level.
The MSCI All-Country World Index closed the quarter 1.05% lower after a modest decline in September, erased the gains accrued in July and August. The equities sell-off was more pronounced in China which plunged 18.13% on the back of ongoing regulatory announcements; downbeat economic data and concerns over the liquidity and debt restructuring of Evergrande, China’s second-largest property developer. Other emerging markets heavily leveraged to China such as Latin America and Africa also experienced significant selling pressures.