Top of the Morning: Emerging Markets - Performance drivers and risks
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We examine what’s happening across emerging markets, and review the external and domestic drivers that are supporting the asset class. Plus, an assessment of key investment risks to be mindful of. Featured is Alejo Czerwonko, CIO for Emerging Markets Americas, UBS Chief Investmen
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4 itemsTop of the Morning: Emerging Markets - Performance drivers and risks
The desk believes that emerging market assets are staging a significant recovery after a prolonged period of underperformance, backed by favorable economic conditions and renewed investor interest. Per the full note [source], emerging market stocks have demonstrated impressive returns in 2025, outpacing the S&P 500 by 20 percentage points, with 35% versus 15% returns respectively. This trend is driven by broader economic growth, productivity gains from AI technologies, and a shift away from concentrated performance in a few sectors. As we observe this renewed enthusiasm towards emerging markets, our internal data indicates a supportive backdrop, with firm views increasingly aligning towards these markets as viable investment options.
Top of the Morning: The evolution of Emerging Markets
The desk sees a significant shift in the performance dynamics of emerging markets, which have notably outperformed the S&P 500 over the past 18 months, driven by strong rallies in key regions like North Asia and Latin America. Per the full note from UBS’ Alejo Czerwonko, markets such as Korea and Taiwan have seen gains of 70% and 50% respectively, reflecting broader macroeconomic improvements and robust commodity prices. Additionally, this rising trend spotlights the evolving nature of the asset class influenced by technological advancements in sectors such as AI and semiconductors. As investors increasingly recognize these shifts, it could set the stage for a more considerable reallocation towards emerging market assets.