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- A number of large developing markets – China, South Korea, Taiwan, South Africa, Brazil, and Mexico – were central to EM outperformance in 2025. In almost all cases – with the exception of Taiwan – valuations stood out as extremely reasonable, bolstered by distinct factors such as the tech rally, currency strength, and the commodity windfall.
- The huge sums of capital expenditure (capex) pouring into cloud service providers and data centres stands to significantly benefit emerging markets. This AI-related capex spend will further fuel demand for semiconductors and the knock-on benefits will boost manufacturers of servers, networking devices, liquid cooling equipment, and other electronic components.
- We believe that the conditions for ASEAN outperformance are building –despite the region’s limited benefit from the AI boom and rise in commodities. The ASEAN region generally does well when the US dollar is weak, there is an upcycle in global manufacturing, as well as when China pursues supply side reforms.
Global Emerging Markets Equity: Outlook 2026
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