Several international investment managers have focused on the strong concentration occurring in emerging market equities, considering that the performance of major indices is increasingly conditioned by a small group of markets.
Nevertheless, these firms maintain a constructive stance on this asset class for the second half of 2026, confident that factors such as still attractive valuations, dollar weakness, and the stabilization of the Chinese economy will continue to support its performance.
In this regard, the asset and wealth management firm of the Lazard Group in France, Lazard Frères Gestion, emphasizes that, although the "MSCI Emerging Markets" has accumulated a gain of 25% so far this year, a large part of that advance is explained by South Korea (+112%) and Taiwan (+68%), which already represent nearly half of the index.
The firm specifies that, if these two markets are excluded, the remaining emerging components would have registered a fall of close to 5%, which highlights the index's high dependence on a small number of stock exchanges.
"Investing passively in emerging markets is now equivalent to taking a directional bet on the global technology cycle and on a small number of countries, which reduces diversification and amplifies volatility," explained Lazard Frères Gestion manager Thomas Planell.
Planell recalls that the South Korean stock market has registered daily movements equal to or greater than 5% in more than twenty sessions so far this year, a dynamic that, he points out, has been intensified by the rise of exchange-traded funds (ETFs) and leveraged trading strategies.
Likewise, the expert warns that, if doubts about artificial intelligence increase, the correction in these stock markets "could be as sharp as their recent rise." However, he acknowledges that profit forecasts for South Korea and Taiwan remain "favorable," although he points out that upward revisions are "clearly decelerating" in the last three and six months, which in turn "affects the prices of certain chips."
In this context, the manager defends that, for investors who want greater exposure to the traditional drivers of emerging markets, such as the growth of the middle class or the commodity cycle, active management currently provides a "more coherent" framework than simple indexed investment.
Aberdeen Investments' Chief Investment Officer, Matt Williams, speaks in the same direction, detecting a gradual shift from passive to active management. "We believe that the combination of 'income' and stock selection can offer a more balanced total return profile, which has been well received by investors seeking both resilience and long-term growth," he corroborated.
Emerging markets remain "underweight" despite tensions
Looking at the second half of 2026, Williams maintains that, despite recent geopolitical noise, they maintain an "optimistic" view on emerging markets. Among the reasons, he cites the increase in global capital investment, the expansion of data center infrastructure, increased defense spending, decarbonization advances, and supply chain diversification as structural forces supporting the current cycle.
"Emerging markets are playing a central role in many of these areas. In our opinion, this creates a very attractive context for active investors, especially for those focused on identifying companies with solid cash flows, resilient earnings, and sustainable returns," the economist emphasized.
Along the same lines, Mediolanum Investments Funds' Head of Equities, Terry Ewing, pointed out in the Group's latest outlook report for the second half of 2026 that emerging markets "continue to be underweight by investors and present attractive valuations."
The strategist adds that market participants can also take advantage of the "weakening dollar and the stabilization of economic activity in China."
Discounts compared to developed markets and the role of China
In relation to the Asian giant, the general director of Swisscanto in Spain, Gonzalo Ramón-Borja Álvarez de Toledo, insists on the importance of recognizing that the People's Republic "is going to be a kind of deflationary engine for these countries". "China has changed its commercial model from developed markets to emerging markets, so it is going to be an exporter of deflation," Ramón-Borja has advanced.
In this scenario, the Swiss asset manager maintains that, in equities, emerging stock markets are trading at discounts of up to 30% compared to developed markets and that earnings per share forecasts are "much higher" than those of the MSCI World index.