Core Viewpoint - Emerging market stocks are expected to outperform developed market stocks for the first time in five years, driven by a weaker dollar and high valuations in the U.S. stock market, leading to renewed interest in these markets [2][4][6]. Group 1: Market Performance - As of the end of November, the MSCI Emerging Markets Index rose 27% in USD terms and 25% in local currency terms, outperforming the MSCI Developed Markets Index, which increased by 19% and 16% respectively [4]. - The Bovespa Index in Brazil and the FTSE/JSE Top 40 Index in South Africa both saw a 50% increase in 2025, highlighting significant gains in emerging markets [6]. - The South Korean Composite Stock Price Index increased by 60% when converted to USD, despite the KRW/USD exchange rate remaining stable [6]. Group 2: Investment Trends - Investors are becoming sensitive to their low holdings in emerging market stocks and are beginning to shift funds towards these markets [8]. - Technology stocks are driving the rise in emerging market equities, with significant gains seen in companies like China's Zhongji Xuchuang, which increased over fourfold due to its products being used in NVIDIA's GPU servers [8]. - Other notable performers include SK Hynix in South Korea and PT Dian Swastatika Sentosa Tbk in Indonesia, which tripled in value amid rising energy demands [8]. Group 3: Economic Outlook - The monetary easing policies across various countries are expected to positively impact economies and corporate performance in the future, with diversification into U.S. assets being a mid-term theme [9]. - Emerging market companies account for over 30% of global corporate revenues, indicating significant growth potential despite their representation in global indices being only about 10% [9]. - Analysts suggest that undervalued small-cap stocks in emerging markets, which have lower correlation with developed markets, present attractive diversification opportunities [9].

Group 1 - The report outlines three potential market scenarios for the second half of the year, drawing parallels to 2019, 2020, and 2024, with the 2019 comparison being the most accepted [1][9] - The 2020 scenario emphasizes a bull market driven by synchronized policy responses from the US, Europe, and China, with a focus on large-cap growth assets [1][33] - The 2024 scenario suggests a potential double bottom formation, with a focus on high-dividend strategies, although it does not currently indicate a clear risk of a second bottom for A-shares [2][49] Group 2 - The 2019 comparison highlights a market characterized by a "push-up" pattern, with a rotation between consumption and technology sectors, driven by improving confidence in the transition from old to new economic drivers [3][15] - The report notes that the current market is experiencing a similar structural rotation as seen in 2019, with significant contributions from new consumption and technology sectors [3][29] - The analysis indicates that the current market environment is in a phase where new economic trends are expected to outperform old ones, particularly in sectors like hardware technology and new consumption models [4][49] Group 3 - The 2020 comparison points out that the market's recovery was supported by a global liquidity influx and a rebound in exports, which is not currently mirrored due to reduced reliance on US trade [33][38] - The report emphasizes that the structural characteristics of the 2020 market included a focus on large-cap growth and high-profit certainty, which attracted institutional investment [42][44] - The 2024 scenario indicates that while there are structural challenges, the domestic economy is expected to stabilize, with a target growth rate of around 5% achievable despite potential fluctuations [49][53]