The new strategic investment case for emerging markets

J.P. Morgan Asset Management

Weiheng Chen, Joshua Lewin

Research

31 Pages

The authors argue emerging markets are shifting from a tactical trade toward a strategic allocation as AI, supply-chain realignment, and stronger fundamentals reshape returns. EM equities rose 24% versus 10% for developed markets in 2026’s first half, while tech-related exposure now exceeds the US market.

Key Takeaways

Performance gap reverses: EM equities rose 24% through June 2026 versus 10% for developed markets, following more than 12 percentage points of outperformance in 2025.
Tech exposure transforms: EM tech-related exposure reached 43.9% in 2026 versus 37.1% for the US, reversing the region’s historical old-economy sector bias.
Growth missed shareholders: EM GDP grew 4.6% annually from 2011–2025, but EPS rose only 0.5%, highlighting why capital discipline mattered more than economic growth.
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