Navin Hingorani
Emerging markets remain well positioned for continued outperformance in 2026, supported by attractive valuations, a weaker US dollar and easing monetary policy in the region, according to Eastspring Investments’ portfolio manager, Navin Hingorani.
Hingorani says the tailwinds that drove emerging markets (EM) to outperform the S&P 500 by around 16 per cent in 2025, remain intact for this year.
“The US dollar remains weak and dropped to its lowest point in four years at the end of January. This is a positive tailwind for EMs.
“EMs in general have higher real rates compared to developed markets, and they have potential to lower rates. A weaker US dollar encourages EMs to ease monetary policy further. Contained inflation and lower rates provide strong tailwinds for domestic demand in those markets.
He says the valuation gap remains compelling in EMs. “Even after a strong year, emerging markets are still trading at around a 60 per cent discount on a price-to-book basis relative to the US.
“With a universe of more than 3,000 stocks and significantly less analyst coverage than developed markets, this offers investors greater opportunity to take advantage of price inefficiencies,” he says.
Hingorani says a ‘value’ investing approach works well in EMs.
“Investors are able to buy stocks where the price does not reflect future earning potential providing investors with good potential to outperform the index,” says Hingorani.
Korea is an example of how value can be unlocked quickly in previously overlooked markets, says Hingorani.
“Korea was unloved going into last year, but was up 100 per cent at the end of 2025. It was one of the top performing markets and it’s already up considerably this year.
“We think there is still further opportunity for investors in Korea. It is home to a lot of companies producing high bandwidth memory that goes into a lot of the AI infrastructure build-out. There has also been improvement in corporate governance under the government’s Corporate Value-Up Program, which has supported Korea’s re-rating.”
Hingorani says emerging markets now represent one of the most compelling opportunities for relative outperformance in many years.
“There are strong valuations, supportive policy settings and improving fundamentals. All the combined together should signal to investors not to ignore this market,” says Hingorani.