Emerging market bull market wave sweeps the globe! Supreme Court tariff ruling sparks record high for Bailey and Emerging Markets ETF.

After the US Supreme Court overturned US President Donald Trump's globally-led tariff policy and ruled Trump's tariffs illegal, emerging market assets once again saw a strong uptrend. A benchmark index measuring emerging market currencies eliminated weekly losses, and the price of an emerging market exchange-traded fund (ETF), which has become increasingly popular in the US stock market this year, surged to hit a historic high. Bank of America Corp's stock market strategist Michael Hartnett, known as "Wall Street's most accurate strategist," has repeatedly emphasized that as the "American exceptionalism" gradually crumbles, with a weak US dollar and global growth shifting away from the US to broader markets, emerging markets are expected to continue outperforming the US market and enter a new bull market cycle. Following Trump's proposal to replace his signature economic plans, the MSCI Emerging Markets Currency Benchmark Index rose on Friday, maintaining gains and completely reversing weekly losses. The iShares MSCI Emerging Markets ETF, issued and managed by the world's largest asset management giant BlackRock, Inc., with accumulated assets of up to $28 billion, achieved a rare "ten consecutive gains," surging to historical highs once again, with trading volume exceeding the 20-day average level by 36%. Fueled by the strong bull market momentum of core component stocks such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, the world's largest chip manufacturer, and two major super-memory chip giants based in South Korea - Samsung Electronics and SK Hynix, the price of iShares MSCI Emerging Markets ETF has consistently hit historic highs, with gains reaching as high as 14% year-to-date, significantly outperforming the S&P 500 index and the Nasdaq 100 index. Under the backdrop of the "American exceptionalism" and "sell America" rhetoric, as well as the fervent global trend of artificial intelligence, the South Korean stock market, which experienced a 75% surge in its benchmark index in 2025, continues to rank as the "world's craziest stock market" in 2026 - with a year-to-date surge of up to 40%. Therefore, the emerging market stock market index, covering core companies in the global AI computing power industry chain such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Hon Hai, SK Hynix, Samsung, Alibaba Group Holding Limited Sponsored ADR, and Tencent, as well as large blue-chip stocks, stands out as leading the global stock market indices, with global investors pouring funds into emerging market funds at a record pace, reflecting a "global capital allocation adjustment," while core ETF assets related to Asian sovereign currencies and sovereign bonds have also received strong inflows this year. The latest bullish catalyst for emerging markets - the Supreme Court tariff ruling "This should be slightly positive for emerging market currencies (EMFX), primarily because it highlights the huge uncertainty at the US government policy level," said Alvaro Vivanco, an emerging market macro strategist at Wells Fargo & Company, a Wall Street financial giant. "This is driving the trend towards diversified thematic allocations." Despite President Trump telling reporters after the Supreme Court tariff ruling that he will impose a 10% tariff globally under Section 122 of the 1974 Trade Act, it is unclear whether the US government needs to refund the tariffs already imposed. Due to market concerns about the significant deterioration of US finances due to tariff refunds, this decision by the Supreme Court has led to a significant increase in long-term US Treasury yields, as traders collectively reacted negatively when assessing the risks of increasing US budget deficits. "The 10% Section 122 tariff benchmark may be significantly lower than many higher equivalent tariff rates currently in place," said senior economist Dan Pan at Standard Chartered Bank's New York market. Earlier that day, traders digested a batch of data pointing to weak US economic activity and continued inflation. The latest US Gross Domestic Product (GDP) growth rate in the fourth quarter was significantly lower than economists' consensus expectations, and a key inflation measure favored by the Federal Reserve exceeded economists' expectations. These data sent out completely contradictory signals about the prospects of US interest rates, with traders closely monitoring the scale and timing of the Fed's next move. Though tension between the US and Iran remains, most Wall Street strategists believe that the tension will not escalate into full-blown war, hindering the strong uptrend in emerging markets since the beginning of this year. On Friday, Trump said the US government is considering limited military strikes against Iran. With the US Supreme Court's overturning of Trump's tariffs as the latest bullish catalyst, emerging market benchmark stock indices saw a significant surge in the second week, continuing the strong rebound led by core companies in the artificial intelligence computing power industry chain. "The fundamental driving factors of emerging market stock index will largely remain unchanged," said stock strategist Wolf von Rotberg from J Safra Sarasin. "The record expansion of capital expenditure by US hyperscalers in AI is strongly supporting their demand for AI computing power infrastructure in 2026, which is also a driving factor for the rise in metal prices." Emerging market uptrend far from over Having introduced the concept of the "Magnificent Seven" (the seven major US tech giants) and successfully predicted the US tech stock bull market and emerging market trends in recent years, Bank of America Corp's stock market strategist Michael Hartnett has repeatedly emphasized that the next global stock market bull market will be led by emerging markets and US small-cap stocks. Due to the uncertainties in tariff and fiscal policies led by the Trump administration causing some large investors to withdraw from the US market, coupled with high valuations and high market concentration in the US stock market, and a weakening US dollar favoring emerging market debt repayment and performance, the "American exceptionalism" and "sell America" rhetoric is resurfacing, with funds seeking more diversified allocations. Since 2025, there has been a rotation of global funds towards emerging markets - data shows that the MSCI Emerging Markets Index significantly outperformed developed markets in 2025, the most robust relative performance since 2017. Hartnett from Bank of America has repeatedly emphasized that global asset allocation will shift from a strong reliance on US tech giants towards emerging market stocks, commodities, and precious metals. He highlights that the high concentration of US tech stocks and the rising risk of AI-related tech stock valuations bubble, while emerging markets and international assets are more attractive in terms of valuation and growth prospects - especially in the context of a reversal in the US dollar cycle. A recent institutional asset allocation report released by another Wall Street financial giant, Goldman Sachs Group, Inc., also indicates that funds in the global market are shifting away from US stocks/USD assets towards global stocks (especially emerging market stocks), and this is not just a short-term trend of fund rotation. Wall Street strategists' optimistic views on emerging markets recently have been largely in line with the market strategy of "selling US assets and seeking global growth opportunities," widely interpreted by investors as a global capital rebalancing process towards "de-dollarization/selling US assets." (Note: This translation may not be perfect, but it gives a general understanding of the text.)