On the left, the green line shows the MSCI APAC ex-Japan Index's relative performance against MSCI World Index, which is a benchmark for developed market (DM) equities. The grey line shows the PMI differential between APAC ex-Japan relative to developed markets, a measure of emerging APAC ex-Japan's growth relative to developed markets. As you see from the chart, the greater APAC ex-Japan's growth relative to DM, the better APAC ex-Japan equities versus DM equities. The grey line has started to trend upwards as of late, indicating that APAC ex-Japan's economic momentum has started to catch up with DM economies. With the U.S. and Europe being ahead in the growth cycle, APAC ex-Japan markets may have further upside from the narrowing of its growth output gap as domestic economies re-open and COVID-19 restrictions normalize.

On the right, the chart shows contribution of margins and revenue to overall earnings growth within APAC ex-Japan equities. Margin contribution to overall earnings growth have picked up recently as companies pass on rising input costs onto consumers.