Many investors still view emerging markets (EMs) as highly cyclical economies that depend heavily on global trade, commodities, and demand from developed-market consumers. These markets are often perceived as especially vulnerable to political and geopolitical instability, a strong US dollar, and capital outflows during periods of market stress.
The past few years have challenged many of those assumptions. True, EMs have faced a difficult backdrop – including increasing global tariffs, volatility in oil prices, and rising geopolitical tensions – yet emerging market equities have not only weathered these headwinds but have continued to outperform. Last year, EM equities led both US and international developed markets. The same is true so far this year also, which is particularly remarkable given the overhang of the war in Iran.
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