Morgan Stanley expects the performance of the Japanese stock market to outperform the emerging market stock market by 2026.

Morgan Stanley stated that, thanks to stronger corporate profits, ongoing reforms, and moderate fiscal support, the performance of the Japanese stock market in 2026 may outperform its emerging market peers; while the growth momentum in emerging markets is expected to weaken as the US dollar stabilizes. In terms of specific market allocations, the institution maintains an "overweight" rating on the stock markets of India, Brazil, the United Arab Emirates, and Singapore, and a "underweight" rating on the stock markets of Saudi Arabia and Indonesia. In terms of sector allocation, Morgan Stanley continues to maintain a core "overweight" rating on the financial, non-essential consumer/e-commerce, and industrial sectors, and a "underweight" rating on the energy and materials sectors.