UBS: Positive factors will support continued strong momentum in emerging market stocks.

Nenad Dinic from the Stock Strategy Research Department of Swiss Baocheng recently pointed out that cyclical and structural positive factors will continue to support the strong momentum of emerging market stocks in 2026. The institution believes that further easing policies by the Federal Reserve, a weakening US dollar, and improving profit growth momentum could drive the market to break through. In 2025, emerging markets saw the first positive turnaround in 12-month expected earnings per share revisions, with earnings per share expected to grow by 17.6% in 2026, exceeding the current developed market growth rate of 11.9%. In addition, from a structural perspective, the deep integration of emerging markets into the global artificial intelligence supply chain, sustained capital spending, especially favorable for emerging market Asian technology companies. Given the changing national and industry structure, the importance of traditional support factors such as rising commodity prices has decreased. The proportion of oil and gas, materials, and industry in emerging markets is only 15%, compared to 40% 20 years ago; China and India's share in emerging market indices has risen from 15% in 2005 to 47%; Brazil, Mexico, and South Africa combined have decreased from 25% to 8%. From a regional perspective, the institution remains bullish on Asia, with the most optimistic outlook for Asia in 2026, reflecting Asia's more robust growth prospects, stronger profit capabilities, and direct benefits from the global artificial intelligence supply chain.