Allspring Global Investments argues that emerging markets may be entering a new era after a decade of relative underperformance, supported by AI infrastructure, manufacturing strength, and attractive valuations. The authors highlight China, South Korea, and Brazil as key drivers, while noting EM equities currently trade at discounts exceeding 40% relative to U.S. markets.
Emerging Markets 2.0: The Tipping Point Is Here
Allspring
Alison Shimada
Research
5 Pages
Key Takeaways
Three Growth Engines: China is projected to grow 4% to 5%, South Korea trades below 10x earnings, and Brazil's 203 million population supports multiple domestic growth drivers.
Valuation Gap Opportunity: EM equities traded at 11.4x forward earnings versus 20.8x for the S&P 500 on April 30, 2026, representing a relative valuation ratio of just 0.55x.
Risk Premium Advantage: EM earnings yields reached 8.7% versus a 4.4% U.S. Treasury yield, creating a 4.3% spread compared with 0.4% for U.S. equities.
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