A turning point for the emerging markets?
Kévin Net, Head of the Asia Division, La Financière de l’Échiquier | February 2026
Although many predicted that the return of Donald Trump and his America First policies would mean a tough 2025 for the emerging markets, the reality has come as a surprise. With a rise of 31% in dollar terms, the MSCI Emerging Markets outperformed the developed markets by 11%[1]. Setting their sights further than the Pavlovian response of buying emerging markets as the dollar weakens, it seems that investors are now viewing these markets as structural winners in a multipolar world. A tactical move that could well turn into a long-term strategic allocation.
The emergence of a new multipolar economic order gives emerging countries the opportunity to diversify their partners. Nowadays almost 50% of their exports are to other emerging countries, compared with just over 30% ten years ago[2]. Trade agreements – so beloved by Trump – have proliferated between emerging countries, but also with the developed economies, as evidenced by the historic pact recently signed between the EU and India. Already Brazil’s top trading partner, China has deepened its ties at a time when tensions with Washington are on the rise. When President Lula visited China in May, nearly twenty deals in key sectors were signed with Xi Jinping, covering the next 50 years. This shift has also allowed Brazil to obtain approx. BRL 27 billion in Chinese investment[3].
Ironically, US trade barriers have caused innovation to accelerate in emerging countries. Because it has been barred from access to cutting-edge technologies, China has stepped up its efforts to close the gap, and the rise of DeepSeek in 2025, considered a credible alternative to OpenAI, acted as a wake-up call for investors. China even seems to have gained the edge in humanoid robotics: it produced four out of five of the humanoid robots sold in 2025[4]. At the same time, US technological ambitions make Korean and Taiwanese companies even more essential, and Washington is now providing subsidies to TSMC, Samsung Electronics and SK Hynix to set up sites in the United States.
Home to nearly two thirds of the world’s population, the emerging countries enjoy an enormous domestic market, capable of withstanding any global slowdown in trade. They have also witnessed the rise of a class of local investor who supports their markets. In India, over 20% of the equity market is now held by domestic private investors; ten years ago, it was about 5%[5].
These structural considerations go hand-in-hand with economic factors: predictions of continued dollar decline, persistent under-exposure to emerging markets by global investors, prices still at attractive levels – not to mention profit growth expected to exceed 20% in 2026[6].
Despite their increasing contribution to the world economy – 60% of world growth by 2030, according to the IMF – emerging market weightings in global indices still fall short of their actual importance in a multipolar world. Recent performance suggests that investors around the world are sitting up and taking notice.
Disclaimers: The data and opinions provided herein and the sectors and stocks mentioned are for information purposes only and thus do not represent an offer to buy or sell securities, investment advice or financial research. Past performance is not a guide to future performance.
[1] Bloomberg, December 2025
[2] FMI, August 2025
[3] Government of Brazil, June 2025
[4] Omdia, January 2026
[5] AMFI, Association of Mutual Funds in India, September 2025
[6] IBES, January 2026