2026 Market View: Emerging Market Equities

Dec 04, 2025

Laurence Bensafi, Portfolio Manager, Deputy Head of RBC Emerging Market Equities, summarises the market in 2025 for the asset class, and gives her thoughts for 2026.

  • Emerging market equities have doubled the performance of the S&P 500 this year, driven by China's AI advancements, strong AI-related stocks in Korea and Taiwan, and a tariffs announcements that highlighted U.S. dependence on emerging markets for imports.
  • We believe we are at a turning point for Emerging Markets Equities in 2026, as emerging markets are poised to be valued more accurately in equity portfolios, contrasting with developed countries facing political instability, high deficits, and debt.
  • Sustained long-term growth requires higher equity returns and faster earnings in emerging markets, though recent reforms (e.g., Korea’s value-up program, China’s share buybacks) signal improving trends.
  • Developed countries are increasingly resembling the emerging markets of the past, with political instability, high deficits, high debt and high inflation. Emerging market countries have in the meantime used globalisation and a deindustrialisation of developed countries to their advantage.
  • While foundational strengths are in place, execution of reforms and profitability enhancements will be critical for a sustained long-term rally.


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