'Marvellous' emerging markets tipped for another star showing in 2026

Core Insights - Emerging markets achieved impressive double-digit returns in 2025, defying global challenges, and investors are optimistic about continued performance in the upcoming year [1] - The combination of sound policies and favorable conditions has contributed to the resilience of emerging markets, making them appear more stable compared to the political and economic uncertainties in the U.S. and Europe [2] Group 1: Market Performance - Emerging markets have shown strong performance despite U.S. tariff policies and trade wars, leading to increased investor interest and diversification away from U.S. assets [4] - The asset dip caused by U.S. tariff announcements in April provided an opportunity for investors to acquire emerging market assets, which were previously under-owned [4] Group 2: Country-Level Changes - Significant policy shifts occurred in various countries, such as Turkey adopting orthodox economic policies, Nigeria eliminating subsidies and devaluing the naira, and Egypt continuing IMF-backed reforms, which have positively impacted investor sentiment [5] - Countries like Ghana, Zambia, and Sri Lanka faced defaults but subsequently received upgrades, indicating a recovery in investor confidence [5] Group 3: Economic Resilience - Emerging markets are now perceived to be on stronger economic footing, capable of withstanding larger shocks, as indicated by analysts [6] - There is an expectation of continued net credit rating upgrades, reflecting improving fundamentals in the sovereign credit landscape of emerging markets [6]