Summary
Highlights
EM equities have held up despite the Iran war, helped by strong earnings growth and the rally in the technology sector.
Earnings growth underpins EM resilience, and the region is attractively priced compared to developed markets and offers diversification opportunities.
Latin America stands out favourably, given its energy exports, strong fundamentals and its distance from the conflict region.
In this edition
Earnings growth expectations have been improving across the emerging world, which remains a diverse universe of opportunities. Although the crisis in the Middle East caused initial volatility, at a broader level, the region seems to have recovered well. The situation remains fluid, but we see substantial long-term opportunities. For instance, in EM Asia, South Korea is one of the most attractive markets, supported by strong earnings momentum, AI-driven memory demand and governance reforms. China, however, faces a less supportive earnings backdrop. While we have a positive long-term view on India due to robust economic growth, solid earnings and reasonable valuations, near-term uncertainty could persist because of the crisis. Latin America, as an exporter of energy, offers a positive backdrop, supported by natural resources, central bank flexibility and some AI-related upside. Brazil’s outlook is constructive, but we are monitoring inflation, government debt and the 2026 election. Overall, we remain constructive on EM, particularly in Latin America and Asia.
* Diversification does not guarantee a profit or protect against a loss.
Key dates
CPI: US, Brazil, India; EZ Zew Survey |
EZ industrial production, Brazil retail sales |
US retail sales, US labour market, UK GDP |
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