Wall Street Maintains Bullish Emerging-Markets Outlook for 2026

Group 1 - Major Wall Street banks anticipate a strong year in emerging markets, driven by dollar weakness and an investment surge in artificial intelligence [1][6] - Emerging market bonds in local currencies have yielded a 7% return this year, the highest since 2020, with a currency gauge increasing over 6% [1][3] - Morgan Stanley projects returns of approximately 8% on local-currency emerging-market debt by mid-2026, while emerging dollar debt is expected to see high single-digit gains over the next 12 months [2] Group 2 - A Bloomberg index tracking carry-trade returns in eight emerging markets has risen more than 12% this year, marking the best performance since the global financial crisis [3] - Bank of America and Goldman Sachs also predict a weaker dollar, with BofA forecasting over 10% returns on emerging local bonds next year, particularly favoring the Turkish lira and Brazilian real [4] - JPMorgan Chase forecasts US AI-related capital expenditures to reach $628 billion by 2028, which is expected to positively impact emerging markets through tech exports and increased metals prices [6]