Core Insights - Goldman Sachs identifies emerging markets as the most favorable investment destination for the next year and five years, rather than the United States [1] Group 1: Emerging Markets Outlook - The expected basic return rate for emerging market stocks is the highest at 8%, with a probability of 55% [2] - There is a 20% probability that emerging market returns will exceed expectations, while there is a 25% probability of experiencing low single-digit negative returns [2] - The volatility of expected returns for emerging markets is the highest among all markets [2] Group 2: Other Market Predictions - The expected return for U.S. stocks, represented by the S&P 500 index, ranks second with a projected growth rate of 7% over the next 12 months and an average return of 6% over the next five years [6] - UK stocks and the MSCI All Country World Index are projected to have average returns of 5% over the next five years, ranking third and fourth respectively [7] Group 3: U.S. Stock Valuation - Despite U.S. stock valuations being at historical highs, Goldman Sachs denies the existence of a bubble, attributing high valuations to reduced volatility in the U.S. economy, which supports stronger corporate earnings stability [8] - The report indicates that valuation itself has limited impact on investment decisions regarding market entry or exit [8] Group 4: Recommended Investment Funds - Goldman Sachs recommends several funds expected to perform well, including iShares MSCI Emerging Markets ETF (EEM), SPDR S&P 500 ETF Trust (SPY), Franklin FTSE UK ETF (FLGB), and iShares MSCI ACWI ETF (ACWI) [8]

Group 1: Economic and Political Context - The U.S. Department of Justice plans to sue Powell, driven by immense election pressure from the Trump administration to lower interest rates ahead of the midterm elections[2] - High credit card and mortgage rates are limiting U.S. consumer spending, with polls indicating significant election pressure on the Trump administration[8] Group 2: Implications for Monetary Policy - The Trump administration's actions may counteract its goal of lowering medium- and long-term interest rates, as rate cuts could increase inflation risks and steepen the yield curve[2] - The independence of the Federal Reserve is compromised, leading to decreased attractiveness of U.S. assets and downward pressure on the dollar index[2] Group 3: Market Reactions and Predictions - Increased expectations for interest rate cuts could benefit commodities like copper and aluminum, as well as emerging market equities[2] - The current U.S. real interest rate is approaching the natural rate, suggesting potential for significant economic growth if rates are cut, but also posing risks for re-inflation[8]

Group 1 - The core viewpoint is that the macro narrative, particularly geopolitical narratives, is profoundly influencing financial market trends and logic [1][2] - The most significant narrative change is the transition from a unipolar system to a multipolar order [1][2] - The trend of multipolarity is not fully reflected in the prices of certain assets, presenting future investment opportunities [1][2] Group 2 - Emerging market stock markets have just begun to open up in terms of market capitalization and corporate profit potential [1][2] - In the long term, as the focus of production shifts and improves, the global revenue share of emerging market companies is expected to expand [1][2] - However, the current market capitalization does not adequately reflect this trend [1][2]

Group 1 - The core narrative indicates a shift from a unipolar to a multipolar world order, significantly impacting financial market trends and logic [1] - Emerging markets are expected to see an increase in market capitalization and corporate earnings, presenting new investment opportunities [1] - The current market valuation of emerging market companies does not fully reflect their potential growth in global revenue share, which is anticipated to expand as production focus and competitiveness improve [1]

Core Viewpoint - The shift from a unipolar to a multipolar world order is significantly impacting financial market trends and logic, presenting future investment opportunities in emerging markets [1] Group 1: Geopolitical Influence - Geopolitical narratives are profoundly affecting the financial markets, with a notable transition towards a multipolar order [1] - This multipolar trend is not yet fully reflected in the prices of certain assets, indicating potential investment opportunities [1] Group 2: Emerging Markets - The market capitalization and profit potential of emerging market equities are just beginning to open up [1] - In the long term, as production focus and competitiveness improve, the share of emerging market companies in global revenues is expected to increase [1] - Current market valuations do not adequately reflect this upward trend in emerging markets [1]

Core Viewpoint - The US dollar is expected to face challenges in 2026 following significant depreciation this year, influenced by various factors including concerns over long-term fiscal sustainability and policy uncertainty [1] Group 1: Factors Influencing Dollar Performance - The dollar's decline this year is attributed to multiple factors such as market concerns regarding long-term fiscal sustainability and policy uncertainty, which have weakened its status as a safe-haven currency [1] - Increased currency hedging by non-US investors and changes in capital flows have also contributed to the dollar's depreciation [1] Group 2: Future Outlook - The Federal Reserve's anticipated further interest rate cuts may continue to pressure the dollar in the coming year [1] - A weaker dollar could support emerging market equities by alleviating external debt burdens, improving capital flows, and enhancing local currency returns [1]

Group 1 - The global stock market has shown strong performance in 2025, driven by the AI investment boom and loose monetary policies, with many indices, including the US stock market, reaching historical highs [1] - Billionaires are optimistic about investment opportunities in China and Western Europe, with 40% of respondents favoring Western Europe for the next 12 months, up from 18% in 2024, and 34% favoring the Greater China market, significantly higher than 11% last year [5] - Over a five-year outlook, the percentage of respondents optimistic about the Greater China market rose from 31% in 2024 to 48% in 2025 [6] Group 2 - There has been a significant decline in optimism regarding the North American market, with only 63% of billionaires favoring it in 2025, down from 80% in 2024, primarily due to concerns over multiple risk factors, particularly tariffs [9] - 66% of respondents identified tariffs as the most likely negative factor affecting the market environment in the next 12 months, followed by geopolitical conflicts (63%), policy uncertainty (59%), and higher inflation (44%) [9] - Billionaires plan to increase investments in private equity, hedge funds, developed market equities, and emerging market equities, with 49% intending to increase exposure to private equity in the next 12 months, followed by hedge funds (43%), developed market equities (43%), and emerging market equities (42%) [11]

Core Insights - The global stock market has shown strong performance in 2025, driven by the AI investment boom and loose monetary policies, with many indices, including the US stock market, reaching historical highs [1] Group 1: Investment Sentiment - Billionaires are increasingly optimistic about investment opportunities in China and Western Europe, with 40% of respondents favoring Western Europe for the next 12 months, up from 18% in 2024 [1] - Similarly, 34% of billionaires see potential in the Greater China market for the next 12 months, a significant increase from 11% in the previous year [1] - Over a five-year horizon, the outlook for Greater China has also improved, with the percentage of respondents optimistic rising from 31% in 2024 to 48% in 2025 [1] Group 2: North America Market Sentiment - In contrast, optimism towards the North American market has sharply declined, with only 63% of billionaires favoring it in 2025, down from 80% in 2024 [4] - Concerns over multiple risk factors, particularly tariffs, are driving this shift, with 66% of respondents identifying tariffs as a major potential negative impact on the market environment [4] - Other significant concerns include geopolitical conflicts (63%), policy uncertainty (59%), and higher inflation (44%) [4] Group 3: Investment Areas - Billionaires plan to increase their exposure to private equity, with 49% indicating plans to invest more in this area over the next 12 months [5] - Other areas of interest include hedge funds (43%), developed market equities (43%), and emerging market equities (42%) [5] - The survey indicates a strong preference for public and private equity investments among billionaires, reflecting a strategic shift in their investment focus [6]

Core Viewpoint - Emerging market stocks have rebounded strongly over the past year, but the Saudi stock market has significantly lagged behind, with expectations for little improvement in the coming year due to low oil prices and potential oversupply in commodities [1] Group 1: Market Performance - The Saudi stock market is expected to remain unattractive for investors, with analysts suggesting a reduction in holdings of Saudi stocks due to poor performance in earnings growth and development momentum [1] - The Saudi stock market has declined by 11% this year, marking the largest drop since 2015 [1] Group 2: Oil Price Dependency - The Saudi stock market remains closely tied to oil prices, which are projected to remain weak through 2026 [1] - Unlike most other emerging markets, the Saudi stock market is not expected to benefit from a weakening US dollar [1] Group 3: Analyst Recommendations - Citigroup analysts recommend investors to reduce their exposure to Saudi stocks, citing underperformance in key financial metrics [1] - Credit Suisse's emerging market equity strategist highlights the lack of attractiveness in Saudi stocks due to their dependence on oil prices and the broader market dynamics [1]

Core Viewpoint - The article discusses how the Federal Reserve's monetary policy impacts emerging market stock markets, categorizing the external macro environment into four scenarios that influence market performance [2][4]. Group 1: Scenarios of Emerging Market Stock Performance - Scenario 1: During global monetary policy switching periods (e.g., initial or final stages of rate hikes/cuts), market expectations regarding the Fed's stance (hawkish/dovish) are crucial, with emerging market economic strength being less significant [5][24]. - Scenario 2: In periods of stable rate hikes/cuts, the sensitivity of the market to monetary policy decreases, and the economic expectations of emerging markets compared to the U.S. become key factors [9][25]. - Scenario 3: During global economic recessions or when recession expectations exist, emerging markets generally perform poorly [13][54]. - Scenario 4: In times of excessive liquidity, emerging market stocks typically perform well [15][62]. Group 2: Historical Review of Emerging Market Stock Performance - The article reviews emerging market stock performance from 2008 to 2025, highlighting key periods and their corresponding MSCI Emerging Markets Index movements [23][26]. - For instance, from January 2008 to February 2009, the MSCI Emerging Markets Index fell by 59.9% due to the global financial crisis, while from February 2009 to April 2010, it rebounded by 92.6% during a period of excessive liquidity [26]. - The performance during the stable rate hike period from February 2016 to January 2018 saw a 69.0% increase in the MSCI Emerging Markets Index, driven by improving global economic conditions [46][48]. Group 3: Future Outlook for Emerging Markets Post-September Rate Cut - Following the September rate cut, three potential macro scenarios for emerging markets are outlined: 1. Continued mild economic cooling with no inflation rise, allowing for a sustained rate cut cycle [73]. 2. A rapid economic recovery post-rate cut, leading to a potential shift back to a hawkish stance by the Fed, which could pressure emerging markets [73][76]. 3. Risks of stagflation due to fluctuating tariffs impacting inflation, which could lead to downturns in both emerging markets and U.S. stocks [73][76]. - The article suggests that the likelihood of scenario 2 is higher, indicating that the best time for emerging market stock performance may have passed, while U.S. stocks could remain strong [76].