The Markets Emerging Markets Could Keep Surging
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Jan 9, 2026 Stratford Dennis, Head of Emerging Market Equities at Goldman Sachs, dives into the promising outlook for emerging markets in 2026, predicting a 15% return. He highlights investment opportunities in China, particularly favoring EMX China for its valuations and tech exposure. Stratford contrasts AI developments in emerging markets with those in the U.S., emphasizing better growth potential. He also discusses Brazil as his top pick due to favorable rate cuts and electoral dynamics, while keeping an eye on U.S. labor market trends impacting global investments.
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Emerging Markets Outlook Is Strong
- Stratford Dennis expects MSCI Emerging Markets to return about 15% in 2026 and sees EM equities as the strongest performing risk asset over the next decade.
- He cites attractive valuations, weaker dollar exposure, underweight positioning, and global diversification as supportive factors.
Prefer EMX China Over Onshore China
- Stratford Dennis likes China but prefers EMX China for cheaper valuations and greater dollar exposure.
- He suggests AI exposure can be obtained in Taiwan and Korea, reducing the need to overweight China alone.
Buy EM AI Exposure
- Allocate to EM AI exposures because they offer more attractive valuations versus U.S. peers and have underperformed recently.
- Consider EMAI as a cleaner positioning play with potential for higher earnings growth than U.S. AI names.