MidLincoln Country Strategy – May 2026

May 2026 delivered a clear pro-equity signal across several MidLincoln universes, with select EM and smaller developed markets materially outpacing core benchmarks. Divergences between equity and bond sleeves, amplified by FX in multiple cases, create actionable relative value opportunities.

We maintain a selective risk-on stance, favoring Hungary, South Korea, Egypt, Israel and New Zealand on the overweight side, while keeping underweights in the Philippines, Indonesia, Peru, Colombia and Norway where equity profiles remain fragile or policy/FX risk is under-compensated.

Core Markets

United States

ML United States Equity Index returned +3.06% in May 2026, while ML United States Bond Index returned +0.59% in May 2026, keeping the bias firmly toward equities. Technology strength drove equity leadership, with IONQ INC, CREDO TECHNOLOGY GROUP HOLDING LTD and INTEL CORPORATION CORP all posting outsized gains, while CHARTER COMMUNICATIONS INC CLASS A, TRACTOR SUPPLY and INSULET CORP weighed on the tape.

On the credit side, high-beta and idiosyncratic names such as SAKS GLOBAL ENTERPRISES LLC TL 2026 and the XEROX HOLDINGS CORP 144A 2029 and 2028 lines led returns, in stark contrast to deep losers like BRIGHTLINE EAST LLC 144A 2030 and ASP UNIFRAX HOLDINGS INC 144A 2029. With base currency in USD, the cross-asset signal is clean: modestly positive risk appetite, with higher dispersion in credit than in large-cap equities.

United Kingdom

ML United Kingdom Equity Index returned +3.16% in May 2026, while ML United Kingdom Bond Index returned +1.48% in May 2026, leaving a constructive but not euphoric risk tone. Equity leadership was relatively defensive and quality-biased, led by INTERTEK GROUP PLC, HALMA PLC and SUNBELT RENTALS HOLDINGS INC, while GLAXOSMITHKLINE, ASTRAZENECA PLC and MARKS AND SPENCER GROUP PLC underperformed.

On the rates and credit side, SYNTHOMER PLC 2029 and the INEOS QUATTRO FINANCE 2 PLC 2030 and 2029 issues outperformed, whereas UK CONV GILT 2073 and UK CONV GILT 2050 lagged, underlining long-duration sovereign vulnerability. GBP strength versus USD (+1.35%) modestly enhanced both equity and bond returns for dollar-based investors, but with more impact on the higher-beta equity sleeve.

Top Overweights

Country	ML Equity Index (May 2026)	ML Bond Index (May 2026)	FX vs USD	Stance
Hungary	+19.01%	+7.57%	HUF +5.77%	Overweight
South Korea	+17.06%	-0.18%	KRW +1.91%	Overweight
Egypt	+11.14%	+1.52%	EGP +0.84%	Overweight
Israel	+11.04%	+3.05%	ILS +5.86%	Overweight
New Zealand	+8.64%	+2.46%	NZD +1.79%	Overweight

Hungary

ML Hungary Equity Index returned +19.01% in May 2026, while ML Hungary Bond Index returned +7.57% in May 2026, with HUF strength amplifying both sleeves. Equity gains were concentrated in OTP BANK, GEDEON RICHTER and MOL HUNGARIAN OIL AND GAS, a narrow but powerful financials–health care–energy axis. On the bond side, long-dated HUNGARY (GOVERNMENT) 2041 and 2038, alongside HUNGARY (GOVERNMENT) 2031, dominated returns, while shorter HUNGARY (GOVERNMENT) 2028 and MAGYAR EXPORT IMPORT BANK ZRT 2027 barely advanced, reinforcing a bullish duration bias within a strongly performing local curve.

South Korea

ML South Korea Equity Index returned +17.06% in May 2026, while ML South Korea Bond Index returned -0.18% in May 2026, a textbook cross-asset divergence where KRW strength modestly enhances equity outperformance. Equity leadership was distinctly tech and restructuring-driven, with SK SQUARE LTD, SAMSUNG ELECTRO MECHANICS LTD and SK HYNIX INC surging, offsetting weakness in KOREA AEROSPACE INDUSTRIES LTD, HANWHA SYSTEMS LTD and HYUNDAI ENGINEERING & CONSTRUCTION. Bond performance was flat to negative, with SHINHAN FINANCIAL GROUP CO LTD 2079 and KOREA (REPUBLIC OF) 2035 and 2046 mildly positive, but long KOREA (REPUBLIC OF) 2055 selling off sharply, arguing against extending duration even as we stay overweight Korean equities.

Egypt

ML Egypt Equity Index returned +11.14% in May 2026, while ML Egypt Bond Index returned +1.52% in May 2026, with a slightly stronger EGP adding incremental upside. The equity rally was narrow, centered on TALAAT MOUSTAFA GROUP, COMMERCIAL INTERNATIONAL BANK EGYP and EASTERN CO., underlining a concentrated real estate and financials-led trade. On the bond side, EGYPT (ARAB REPUBLIC OF) 2050, 2049 and 2047 led gains, whereas shorter EGYPT (ARAB REPUBLIC OF) 2029, 2061 and 2027 barely moved, suggesting investors prefer the convexity at the long end but still demand a higher risk premium versus peers.

Israel

ML Israel Equity Index returned +11.04% in May 2026, while ML Israel Bond Index returned +3.05% in May 2026, with ILS appreciation significantly boosting both sleeves for USD-based investors. Equity strength was driven by AZRIELI GROUP LTD, PHOENIX FINANCIAL LTD and MONDAYCOM LTD, while CHECK POINT SOFTWARE TECHNOLOGIES and ELBIT SYSTEMS LTD underperformed, indicating a rotation toward domestic cyclicals and select growth. Israel’s sovereign curve outperformed via ISRAEL (STATE OF) 2030, 2028 and 2037, while ISRAEL ELECTRIC CORP LTD 2032 and 2038, along with TEVA PHARMACEUTICAL FINANCE NETHER 2029, were marginal laggards, reinforcing the preference for sovereign over quasi-sovereign risk.

New Zealand

ML New Zealand Equity Index returned +8.64% in May 2026, while ML New Zealand Bond Index returned +2.46% in May 2026, with NZD strength providing an additional tailwind. Equity performance was led by INFRATIL LTD and utilities MERIDIAN ENERGY LTD and CONTACT ENERGY LTD, partially offset by weakness in FISHER AND PAYKEL HEALTHCARE CORPO and more muted gains from AUCKLAND INTERNATIONAL AIRPORT LTD. On the bond side, longer-dated NEW ZEALAND (GOVERNMENT OF) 2051, 2054 and 2041 outperformed, while the 2028–2030 segment posted smaller gains, keeping the overweight bias toward long-duration sovereign exposure in a supportive rates backdrop.

Top Underweights

Country	ML Equity Index (May 2026)	ML Bond Index (May 2026)	FX vs USD	Stance
Philippines	-9.68%	+0.33%	PHP -3.13%	Underweight
Indonesia	-9.29%	-0.50%	IDR -1.73%	Underweight
Peru	-7.06%	-0.89%	Base USD	Underweight
Colombia	-4.84%	+0.25%	COP -1.33%	Underweight
Norway	-3.78%	+5.09%	NOK +2.48%	Underweight

Philippines

ML Philippines Equity Index returned -9.68% in May 2026, while ML Philippines Bond Index returned +0.33% in May 2026, with PHP depreciation further eroding equity returns for USD investors. Losses were broad-based, led by AYALA LAND INC, BANK OF THE PHILIPPINE ISLANDS and AYALA CORP, barely offset by modest resilience in INTERNATIONAL CONTAINER TERMINAL S, MANILA ELECTRIC and METROPOLITAN BANK AND TRUST CO. In contrast, selective high-yield names such as SAN MIGUEL GLOBAL POWER HOLDINGS C 2079 performed well, but sovereign lines including REPUBLIC OF PHILIPPINES 2042 and PHILIPPINES (REPUBLIC OF) 2049 and 2045 underperformed, arguing for a cautious overall stance.

Indonesia

ML Indonesia Equity Index returned -9.29% in May 2026, while ML Indonesia Bond Index returned -0.50% in May 2026, with IDR weakness adding to the downside. Equity losses were driven by DIAN SWASTATIKA SENTOSA, BARITO RENEWABLES ENERGY and CHAROEN POKPHAND INDONESIA, only partially offset by gains in CHANDRA ASRI PACIFIC and BARITO PACIFIC. In credit, NICKEL INDUSTRIES LTD 2030, PERTAMINA PERSERO PT 2050 and INDOFOOD CBP SUKSES MAKMUR TBK PT 2051 were relative winners, yet INDONESIA (REPUBLIC OF) 2027 and 2028 sold off meaningfully, highlighting sovereign and policy risk at the front of the curve.

Peru

ML Peru Equity Index returned -7.06% in May 2026, while ML Peru Bond Index returned -0.89% in May 2026. Base currency is USD; omit FX commentary. Equity weakness was concentrated in BUENAVENTURA ADR REPRESENTING and CREDICORP LTD, with SOUTHERN COPPER CORP also negative, underscoring sensitivity to commodities and financials. On the bond side, PETROLEOS DEL PERU PETROPERU SA 2032, MINSUR SA 2031 and VOLCAN COMPANIA MINERA SAA 2032 managed gains, but PERU (REPUBLIC OF) 2033, 2032 and 2029 posted steep losses, signaling sovereign-specific stress and justifying an underweight across the curve.

Colombia

ML Colombia Equity Index returned -4.84% in May 2026, while ML Colombia Bond Index returned +0.25% in May 2026, with COP weakness slightly worsening total returns for global investors. Equities were dragged lower by GRUPO CIBEST SA and GRUPO CIBEST PREF SA, with only INTERCONEXION ELECTRICA SA marginally positive. In contrast, high-yield corporates like BANCO DAVIVIENDA SA 2079, GRAN TIERRA ENERGY INC 2031 and COLOMBIA TELECOMUNICACIONES SA ESP 2030 outperformed, but severe drawdowns in COLOMBIA (REPUBLIC OF) 2035 and 2029, alongside AVIANCA MIDCO 2 PLC 2030, point to elevated sovereign and corporate event risk.

Norway

ML Norway Equity Index returned -3.78% in May 2026, while ML Norway Bond Index returned +5.09% in May 2026, with NOK appreciation cushioning bond and equity returns for USD-based portfolios. Equity underperformance came from KONGSBERG GRUPPEN, TELENOR and DNB BANK, partially offset by gains in AKER BP, NORSK HYDRO and GJENSIDIGE FORSIKRING, revealing a split between energy/materials resilience and broader cyclicals. Norwegian government bonds rallied strongly, with NORWAY KINGDOM OF (GOVERNMENT) 2028, 2034 and 2029 leading, while VAR ENERGI ASA 2083 and longer sovereigns such as NORWAY KINGDOM OF (GOVERNMENT) 2039 and 2042 lagged somewhat, favoring a curve-neutral but equity-underweight allocation.

Cross-Asset Divergence

Hungary: ML Hungary Equity Index materially outpaced ML Hungary Bond Index, while HUF strength amplified the signal; long-duration HUNGARY (GOVERNMENT) 2041 and 2038 outperformed, supporting a pro-risk, pro-duration stance.
South Korea: ML South Korea Equity Index surged even as ML South Korea Bond Index slipped, and KRW strength further rewarded equity risk; tech cyclicals such as SK HYNIX INC and SAMSUNG ELECTRO MECHANICS LTD dominated, while KOREA (REPUBLIC OF) 2055 weakness argues against extending duration.
Egypt and Israel: In both markets, equities significantly outperformed bonds, with EGP and ILS appreciation enhancing local returns; Egypt’s TALAAT MOUSTAFA GROUP and Israel’s AZRIELI GROUP LTD highlighted domestic beta, while long sovereigns like EGYPT (ARAB REPUBLIC OF) 2050 and ISRAEL (STATE OF) 2030 led in fixed income.
New Zealand and Norway: New Zealand showed a balanced risk-on profile with ML New Zealand Equity Index beating ML New Zealand Bond Index, both supported by NZD strength, whereas Norway displayed the opposite, with ML Norway Bond Index strongly outperforming ML Norway Equity Index despite NOK gains.
Philippines, Indonesia, Peru and Colombia: In the Philippines and Colombia, modestly positive bond returns contrasted with deep equity losses, magnified by weaker PHP and COP; Indonesia and Peru saw synchronized declines across both equities and bonds, leaving little refuge within their local asset classes.

FX Lens

HUF vs USD (+5.77%): HUF strength significantly enhanced already strong returns in ML Hungary Equity Index and ML Hungary Bond Index, making Hungary one of the clearest positive total-return stories in May 2026.
KRW vs USD (+1.91%): KRW appreciation modestly boosted the outsized equity gains in ML South Korea Equity Index, while offering only limited relief to the small negative in ML South Korea Bond Index.
EGP vs USD (+0.84%): Slight EGP strength marginally improved the double-digit equity gains and moderate bond returns in Egypt, but the move was not large enough to change the relative ranking across EM.
ILS vs USD (+5.86%): ILS was one of the strongest EM/DM currencies in May 2026, materially amplifying both ML Israel Equity Index and ML Israel Bond Index performance for USD investors.
NZD vs USD (+1.79%): NZD appreciation modestly lifted otherwise solid local equity and bond returns, improving New Zealand’s attractiveness as a defensive overweight.
PHP vs USD (-3.13%): PHP weakness compounded the sharp drop in ML Philippines Equity Index and diluted the small positive in ML Philippines Bond Index, reinforcing the underweight call.
IDR vs USD (-1.73%): IDR depreciation added to negative local returns in both ML Indonesia Equity Index and ML Indonesia Bond Index, making Indonesia one of the more challenging EM exposures.
COP vs USD (-1.33%): COP weakness marginally worsened already negative equity performance in ML Colombia Equity Index and eroded the slight positive in ML Colombia Bond Index.
NOK vs USD (+2.48%): NOK gains supported the strong rally in ML Norway Bond Index and cushioned equity underperformance, but do not offset the relative downside in Norwegian equities versus peers.

Implementation Notes

Bucket	Countries	Equity Tilt	Bond Tilt	FX Consideration
Pro-Risk Overweights	Hungary, South Korea, Egypt, Israel, New Zealand	Overweight (equity over bond in Hungary, South Korea; balanced in Egypt, Israel, New Zealand)	Neutral to slightly long duration in Hungary, Egypt, Israel, New Zealand; short duration in South Korea	HUF, KRW, ILS and NZD strength argue for active FX capture; EGP impact more modest
Defensive Underweights	Philippines, Indonesia, Peru, Colombia, Norway	Underweight (notably in Philippines, Indonesia, Peru, Colombia; selective in Norway)	Prefer sovereign/corporate credit over equity in Philippines and Colombia; cautious on Indonesia and Peru duration; constructive Norway duration	PHP, IDR and COP weakness support reduced exposure; NOK strength allows hedged bond allocations; Peru in USD avoids FX layer
Cross-Asset Pairings	Hungary vs Philippines; South Korea vs Indonesia; Israel vs Peru; New Zealand vs Norway	Favor higher-growth, FX-supportive markets (Hungary, South Korea, Israel, New Zealand)	Use long-duration winners (Hungary, New Zealand, Norway) against vulnerable curves (Philippines, Indonesia, Peru, Colombia)	Structure trades with partial FX hedges where local currencies are already strong (HUF, ILS, NOK) and maintain under-hedged stances where currencies are weak (PHP, IDR, COP)