Sep 10, 2026 · 9 min · 6 segments
Emerging market equities have increasingly evolved into a technology and manufacturing-led asset class in the wake of a surge in AI‑related capital expenditure by the hyperscalers. Zhikai Chen, Global…
Zhikai ChenGuestDaniel MorrisHostGK, if we look at the performance of emerging market equities relative to developed market equities, it went through a rough patch from 2010 for quite a few years.
So far in 2026, as of early September, EM equities outperformed developed market equities.
You still have investors that are underweight emerging market equities, maybe not quite convinced yet that this outperformance is sustainable.
there is volatility in performance over different time periods, as EM equities investing is by nature higher on the risk-reward spectrum.
But if you look at the longer-term horizon and on USD terms, compared to, say, MSCI World, the United States, Europe, and Japan, emerging markets as a region has outperformed since 1999.
I don't dispute that a big part of that has been the outperformance in the last couple of years.
While most investors are probably aware that emerging markets is the economic growth engine of the world and historically outsized in the world's resource supply, investors are probably less attuned to the dynamism and the competitiveness of its manufacturing and increasingly knowledge-based industries that's now driving corporate returns.
EM, in my view, is too large and now too critical for equities investors to be underexposed to it.
If you take a look at the subcomponents within the emerging markets, Latin America has also outperformed US, Europe, Japan, and MSCI world over the last two years.
It's about the diversity of the gains that you could have by having some parts of your investment in emerging markets equities, in my view.
GK, if we look at the performance of emerging market equities relative to developed market equities, it went through a rough patch from 2010 for quite a few years.
So far in 2026, as of early September, EM equities outperformed developed market equities.
You still have investors that are underweight emerging market equities, maybe not quite convinced yet that this outperformance is sustainable.
there is volatility in performance over different time periods, as EM equities investing is by nature higher on the risk-reward spectrum.
But if you look at the longer-term horizon and on USD terms, compared to, say, MSCI World, the United States, Europe, and Japan, emerging markets as a region has outperformed since 1999.
I don't dispute that a big part of that has been the outperformance in the last couple of years.
While most investors are probably aware that emerging markets is the economic growth engine of the world and historically outsized in the world's resource supply, investors are probably less attuned to the dynamism and the competitiveness of its manufacturing and increasingly knowledge-based industries that's now driving corporate returns.
EM, in my view, is too large and now too critical for equities investors to be underexposed to it.
If you take a look at the subcomponents within the emerging markets, Latin America has also outperformed US, Europe, Japan, and MSCI world over the last two years.
It's about the diversity of the gains that you could have by having some parts of your investment in emerging markets equities, in my view.
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