An Emerging Markets Supercycle Has Just Begun

Are emerging markets just a one-trick pony? After a stellar 2025, risk-averse investors are getting cautious. After all, this asset class has been an underdog for such a long time. Since 2010, the benchmark MSCI Emerging Markets Index has not outperformed its US counterpart for two consecutive years.

Traders should keep calm and carry on. There are good reasons to believe that emerging markets have entered a yearslong supercycle. The mechanisms that underpinned 2025’s outperformance, such as a weak dollar, benign global economic growth and investors’ desire to diversify internationally, continue to be present. But more importantly, new investment possibilities are opening up following an eventful January.