• Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
Stock

Weak US outlook revives investor interest in emerging markets

by May 22, 2025
by May 22, 2025

Emerging market stocks are once again at the center of investor interest, driven by growing disillusionment with US assets and a renewed search for growth abroad.

The shift comes as Moody’s recent downgrade of the US credit outlook and a spike in Treasury yields have shaken confidence in the strength of American financial markets.

Adding to the momentum, Bank of America declared emerging markets as “the next bull market” in a recent note to clients.

“Weaker US dollar, US bond yield top, China economic recovery… nothing will work better than emerging market stocks,” said Michael Hartnett, chief investment strategist at BofA Global Research.

On Monday, JPMorgan followed suit, upgrading its rating on emerging market equities from neutral to overweight, citing improving US-China relations and favourable valuations.

Performance gap between US and EM widens

The MSCI Emerging Markets Index, which tracks equities across 24 countries, has risen 8.55% year-to-date, sharply outpacing the US benchmark S&P 500’s modest 1% gain in the same period.

The divergence has become more pronounced since April 2, when former President Donald Trump unveiled a new wave of “reciprocal” tariffs.

While both US and global markets initially fell in the wake of the announcement, emerging market stocks staged a robust recovery.

Between April 9 and April 21, the MSCI Emerging Markets Index climbed 7%, while the S&P 500 declined by more than 5%.

Despite a mild rebound in US assets since, sentiment remains fragile.

The US 30-year Treasury yield surged past 5% on Monday, touching levels last seen in November 2023.

Meanwhile, US equities broke a six-day winning streak on Tuesday, as Moody’s downgrade reignited market concerns.

Why are EM equities poised to outperform?

The unfolding trend may signal the start of a broader rotation in global asset allocation.

Malcolm Dorson, head of the active investment team at Global X ETFs, believes emerging market equities are now in a unique position to outperform.

“After underperforming the S&P over the past decade, EM equities are uniquely positioned to outperform over the next cycle,” Dorson told CNBC.

He pointed to a confluence of factors including a softer US dollar, underweighted investor positioning, and strong growth prospects at discounted prices.

According to his data, US investors typically allocate only 3% to 5% of their portfolios to emerging markets, compared to the 10.5% weight of EM in the MSCI Global Index.

JPMorgan notes that EM stocks are trading at around 12 times forward earnings—significantly lower than their developed market counterparts.

India, Brazil, and Argentina attract spotlight

Among the emerging economies, India stands out as the strongest long-term growth story, underpinned by rising domestic demand.

Dorson also highlighted Argentina for its cheap valuations, and Brazil and Greece for recent sovereign credit upgrades that have improved their investment case.

“We could be at the start of a new rotation,” said Mohit Mirpuri, equity fund manager at SGMC Capital.

“After years of US outperformance, global investors are beginning to look elsewhere for diversification and long-term returns.”

Ola El-Shawarby, a portfolio manager at VanEck, added that previous EM rallies were often cut short by fleeting catalysts.

This time, she argues, the combination of undervaluation, improved fundamentals, and structural reforms could provide longer-lasting momentum.

“Emerging markets are firmly back in the conversation,” she said.

The post Weak US outlook revives investor interest in emerging markets appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
What next for the Zoom Video stock price after earnings?
next post
Trade Negotiations aren’t Chess, Poker, or Go. They’re Bridge.

Related Posts

Asian markets open: Nikkei hits another record high,...

October 7, 2025

Top reasons why the Topix and Nikkei 225...

October 7, 2025

Goldman Sachs boosts 2026 gold price forecast to...

October 7, 2025

Beijing intensifies oil stockpiling amid global supply and...

October 7, 2025

Trump’s new 25% truck tariff targets imports from...

October 7, 2025

CAC 40 Index outlook: Understanding the decline and...

October 7, 2025

DAX Index analysis: Why German stocks are rising...

October 7, 2025

Europe markets open: Stoxx 600 flat, CAC 40...

October 7, 2025

LG India’s $1.3B share sale highlights record IPO...

October 7, 2025

Trilogy Metals shares soar over 200% as White...

October 7, 2025

Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.

By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

Recent Posts

  • The OECD’s Warning to America: Economic Growth Is Slipping

    October 7, 2025
  • Semiconductor Giants with Tech-Industrial Ambitions

    October 7, 2025
  • Will Bitcoin Strengthen or Weaken US Dollar Dominance?

    October 7, 2025
  • Asian markets open: Nikkei hits another record high, Sensex up 140 pts

    October 7, 2025
  • Top reasons why the Topix and Nikkei 225 indices are soaring

    October 7, 2025
  • Goldman Sachs boosts 2026 gold price forecast to $4,900 amid strong demand

    October 7, 2025

Editors’ Picks

  • 1

    Meta executives eligible for 200% salary bonus under new pay structure

    February 21, 2025
  • 2

    Walmart earnings preview: What to expect before Thursday’s opening bell

    February 20, 2025
  • 3

    New FBI leader Kash Patel tapped to run ATF as acting director

    February 23, 2025
  • 4

    Cramer reveals a sub-sector of technology that can withstand Trump tariffs

    March 1, 2025
  • 5

    Anthropic’s newly released Claude 3.7 Sonnet can ‘think’ as long as the user wants before giving an answer

    February 25, 2025
  • 6

    Nvidia’s investment in SoundHound wasn’t all that significant after all

    March 1, 2025
  • 7

    Pop Mart reports 188% profit surge, plans aggressive global expansion

    March 26, 2025

Categories

  • Economy (2,804)
  • Editor's Pick (280)
  • Investing (185)
  • Stock (1,914)
  • About us
  • Contact us
  • Privacy Policy
  • Terms & Conditions

Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Read alsox

After ‘Operation Sindoor’: what does the market’s...

May 7, 2025

Consumer staples outperform in 2025, but here’s...

March 10, 2025

Long LYTS: LYTS Rebounds from Key Support...

April 27, 2025