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Sick man

As the sell-off took hold last week, UK equities found themselves in a familiar spot - back at the bottom of the pile. Other than Japan, the UK was the worst performing major region during a dismal February, with little sign that an in-built valuation discount worked in its favour.

To take one particular point of contrast, Europe - whose own economic recovery remained in the balance prior to virus concerns taking hold - saw its stock markets hold up relatively well. The difference must be partly related to the UK market’s oversize commodities exposure: the impact from the slump in resources prices is obvious.

But not all moves are quite so intuitive. UK equity income funds, for example, have done worse on average than their growth-focused peers. And the FTSE 250 performed almost as badly as the FTSE 100 last month.

The most unusual aspect of the equity sell-off doesn’t relate to the UK, however. China, the epicentre of the crisis, saw its stock markets rebound sharply in February. Having fallen eight per cent in the opening three days of the month, the Shanghai Composite was back in positive territory on the month - in local currency terms - as of last Thursday. Year to date, the index is down just 2.5 per cent.

Just as DFMs won’t have suffered too much from the January drawdown, the lack of A-Shares in their portfolios means the February rebound won’t have affected them too much, either.

But this mysterious bounce does help explain why another out of favour area -  EM equities - proved (a little) more resilient than most last month. From UK investors’ perspective, while global issues may have taken over from domestic affairs for now, it’s their home market that remains something of a pariah.