Stephen Small

Ninety One, a global investment manager with AUD $345.5 billion in assets under management (as at 30 September 2026), has announced that MLC Asset Management, part of Insignia Financial, one of Australia’s leading diversified wealth management groups, has awarded multiple mandates to Ninety One’s 4Factor Emerging Markets Equity strategy.

Managed by Co-Portfolio Managers Archie Hart and Varun Laijawalla, the AUD $22.8 billion 4Factor Emerging Markets Equity strategy has a 16-year track record investing across the breadth of emerging markets.  It seeks opportunities in companies listed or based in emerging markets, as well as businesses with significant economic exposure to them. Its active approach provides ‘core’ exposure to global emerging market equities through a portfolio with balanced exposure to growth, quality, value and momentum through the cycle. The strategy seeks to generate long-term excess returns through bottom-up stock selection without taking excessive risk.

The strategy sits within Ninety One’s AUD $48 billion Emerging Markets Equity platform, which offers a range of strategies tailored by geography, risk profile and investor objectives. Founded in South Africa in 1991, Ninety One has 35 years of experience investing in emerging markets, which continues to shape its approach to investing across changing market cycles.

MLC selected the strategy following a comprehensive review of the emerging markets equity landscape.

Stanley Yeo, Head of Equities, MLC Asset Management: “In an environment where fundamental global equity managers have been challenged, the emerging markets multi-manager portfolio we manage has delivered strong alpha. Ninety One’s proven investment approach and deep expertise in the asset class makes them a strong partner as we seek to continue to deliver positive outcomes for our members and clients.”

Stephen Small, Co-Head of Australia, Ninety One: “Emerging markets are home to some of the world’s most dynamic companies and increasingly important sources of global growth and innovation. Yet they remain underrepresented in many global portfolios, creating a compelling opportunity for long-term investors. It is an opportunity Ninety One understands deeply after 35 years of investing in emerging markets.

“MLC Asset Management is an important partner for Ninety One, and this mandate reflects our shared conviction in the role emerging market equities can play in delivering long-term outcomes for Australian investors.”

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George Cheveley

Central banks have returned to the gold market in force following a Q1 slowdown, strengthening the case for a re-rating of gold mining equities. Sustained official-sector demand suggests the gold price may be better supported than many market participants had assumed.

Central banks added a net 289 tonnes of gold in the second quarter of 2026, according to the World Gold Council, a record for a second quarter and 62% higher than a year earlier. Purchases were more than five times Q1’s central-bank net gold demand, challenging concerns earlier this year that central banks were retreating from the market. Poland added 51 tonnes, while China added 33 tonnes.^[1]

George Cheveley, Natural Resources Portfolio Manager: “The significance of the central-bank data is not simply that they are buying gold again, but what it tells us about the level at which they are prepared to buy. Central banks remain committed to accumulating gold, but they are price sensitive. If that demand is putting a floor under gold around these levels, the implications for gold miners could be significant – particularly when consensus expects the gold price to move considerably lower.”

China remains particularly important to the outlook, accounting for around one-third of annual gold demand. While its recent monthly additions are relatively modest compared with its history of accumulation, continued buying points to the strategic role gold plays in its reserves. BMO analysis suggests that China’s central-bank gold holdings could already exceed 5,200 tonnes, more than double the official figure.^[2]

Its continued buying also underscores the strategic nature of China’s gold programme, including its ambition to bolster the renminbi’s role in the global economy.

The trend extends beyond China. Since Western governments froze Russian US dollar assets following the invasion of Ukraine, reserve diversification has become an increasingly important consideration for central banks. Gold’s average share of central-bank reserves has risen from 14% to 25% in two years, although part of that increase reflects the rise in the gold price.^[2]

Cheveley: “Gold has several characteristics that remain attractive to central banks: it is highly liquid, acts as a long-term inflation hedge and, critically, does not carry another country’s credit risk. For countries looking to diversify their reserves, those characteristics are difficult to replicate.” 

Implications for gold equities

If gold prices remain around current levels over the coming years, gold mining could remain extremely profitable – and potentially more profitable than current consensus expectations imply.

The disconnect with market expectations is significant: the average 2030 gold-price forecast among analysts at major financial institutions is US$3,890 an ounce.^[3]

Many gold miners are already enjoying margins above 100%, yet valuations have not returned to the levels seen historically when gold equities traded at a premium to the wider equity market.

That premium disappeared during the 2010s following a period of poor capital discipline across the sector, when a number of miners overborrowed, overexpanded and overpaid for assets. The industry has since changed significantly, with balance-sheet discipline, capital allocation and cash returns to shareholders now guiding principles for many mining companies. 

Cheveley: “Gold miners spent much of the last decade rebuilding credibility with investors. Capital discipline is considerably stronger, balance sheets are healthier and management teams are much more focused on cash returns to shareholders.

“If gold can remain in a US$4,000–5,000 an ounce range, the earnings and cash-flow potential for the sector is substantial. Yet gold equities are still not trading at the valuation multiples they commanded historically. That creates the potential not only for higher earnings, but for a re-rating.”

Gold equities rose by around 30% in August. However, that move broadly reflected gold stocks’ typical leverage of around two times to movements in the underlying gold price, rather than a significant expansion in valuation multiples.

Cheveley: “The rally in gold equities does not necessarily mean the opportunity has passed. So far, much of the move can be explained by the normal leverage miners have to the gold price rather than investors paying higher multiples for those earnings. If central-bank demand continues to support gold around current levels, there could be further upside from a re-rating of the sector.”

———–

Notes:
[1] World Gold Council, ‘Gold Demand Trends: Q2 2026’, July 2026.
[2] BMO, ‘Gold: What China Wants’, July 2026.
[3] Calculation includes forecasts on Bloomberg on 7 September 2026; excludes forecasts >180 days old.

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Nazmeera Moola

Emerging market private credit is entering a new phase of growth, with institutional investors broadening allocations beyond developed markets in search of stronger lender protections, attractive risk-adjusted returns and greater portfolio diversification.

The asset class attracted a record US$22.3 billion^[1] in deployment across FY2025—nearly 40% above the previous record set in 2022 of US$16 billion.^[2] The record deployment reflects growing institutional interest in emerging market private credit as investors broaden allocations beyond traditional developed markets.

Ninety One manages US$8.4. billion in Alternative Credit strategies. Between January 2025 and June 2026, the firm reviewed close to 1000 investment opportunities, completing over 90 transactions across 28 countries and deploying more than US$2 billion across renewable energy, digital infrastructure, logistics, transportation and industrial projects and corporates.

What’s driving the next phase of emerging market private credit?

Five structural shifts are reshaping emerging market private credit. While the asset class remains a relatively small part of the global private credit market, broader institutional participation, larger transaction sizes and rising demand suggest it is entering a new phase of development.

1. Structural financing demand continues to outpace available capital

Rapid urbanisation, energy transition, digitalisation and infrastructure investment continue to drive substantial financing requirements across emerging markets. At the same time, regulatory capital requirements continue to constrain traditional bank lending, creating significant opportunities for specialist private lenders to provide long-term financing solutions.

Nazmeera Moola, Chief Commercial Officer, Private Markets: ” The growth we’re seeing in emerging market private credit isn’t being driven by one factor. Financing needs are growing at the same time as institutional investors are looking beyond developed markets for new sources of return and diversification. That combination is creating a much broader opportunity set for private credit to provide the long-term, flexible capital that businesses and projects across emerging markets need.”

2. The relative risks of emerging market private credit are better understood by investors

Emerging markets have long been perceived as higher risk. As the market has developed, greater data, transaction history and investor experience are enabling a more nuanced assessment of relative risk. Private credit is not a homogenous market, although emerging market private credit transactions often benefit from more conservative lending characteristics than comparable developed market deals. Borrowers typically operate with lower leverage, loans are predominantly senior secured, covenant protections remain robust and transactions are frequently governed by English or US law, giving lenders stronger structural protections than are often available in developed markets.

Alper Kilic, Head of Alternative Credit: “The perception of emerging market risk has not kept pace with reality.  Private credit is not one market, and investors need to look beyond the label. In developed markets, competition has shifted negotiating power towards borrowers. Emerging markets remain a lender’s market, allowing us to negotiate strong collateral packages, comprehensive covenant protections and conservative capital structures while still delivering attractive yields.”

3. Capital in EMs is financing an increasingly sophisticated real economy

Unlike many developed market private credit portfolios, where lending has become concentrated in sponsor-backed software and services businesses, emerging market private credit continues to finance the infrastructure and essential assets underpinning long-term economic growth. As projects increase in scale and complexity, demand is also growing for sophisticated, tailored financing solutions that traditional sources of capital may be less equipped to provide.

Of the 90+ completed transactions, a third supported infrastructure and real assets, including renewable energy, digital infrastructure and telecommunications.  Of the US$2 billion deployed, US$500 million was invested through the Emerging Africa and Asia Infrastructure Fund, a Private Infrastructure Development Group (PIDG) company managed by Ninety One, including the groundbreaking development of Egypt’s and the wider MENA regions first sustainable aviation fuel (SAF) production facility.

Across the wider private markets platform, Ninety One also completed its first transaction in Oman: a senior secured project finance loan, arranged alongside the IFC, to finance construction of a traceable, solar grade polysilicon manufacturing facility. Once operational, the facility is expected to be the largest single site and lowest cost facility of its kind outside China, while mitigating significant carbon emissions.  Transactions of this complexity illustrate the role private lenders can play in structuring bespoke financing for increasingly large and complex projects.

In Latin America, the firm completed 12 transactions across Brazil, Chile, Colombia, and Mexico.  These included financing the region’s largest renewable energy developer and remediating tailings at a major Chilean copper mine, building sustainable data centre infrastructure, decarbonising agricultural cold storage and extending small, socially responsible loans to Colombian pensioners through a leading microfinance provider.

4. The opportunity set is expanding, but access remains a constraint

As institutional demand grows and transaction sizes increase, access to emerging market private credit opportunities remains highly dependent on specialist origination networks and local expertise. Unlike more established private credit markets in Europe and the US, emerging markets require specialist local knowledge and relationships built over many years, creating significant barriers to entry.

During this period, the 60-strong team reviewed close to 1000 investment opportunities, allowing it to remain highly selective when deploying capital. Transaction sizes averaged US$23 million. Leverage remained stable at 3–4x, demonstrating that larger deal sizes have not come at the expense of underwriting discipline.

As transactions become larger and more complex, choosing a manager with the ability to originate, structure and lead deals is becoming increasingly important. During the period, Ninety One completed its first transaction exceeding US$100 million, acting as Mandated Lead Arranger, demonstrating the capabilities required to execute transactions of this scale.

Kilic: “Access remains one of the biggest differentiators in emerging market private credit. Our long-standing relationships with international investment banks, regional financial institutions development finance institutions, local governments and corporates enable access a broad range of opportunities, remain highly selective and, increasingly, originate and lead larger, more complex transactions.”

5. Investors are broadening beyond developed markets

As competition has intensified in developed markets, institutional investors are broadening private credit portfolios beyond North America and Europe. Emerging markets offer genuine geographic diversification and an expanding opportunity set, supported by structural financing demand, stronger lender protections and lower competition among private lenders.

Together, these trends point to a market that is becoming larger, more sophisticated and increasingly capable of supporting complex, long-term financing across emerging markets.

Moola concluded: “Emerging market private credit is at an inflection point. Investors are no longer viewing it as a niche allocation, but as a strategic part of global private markets portfolios. The next phase will be about moving from recognition of the opportunity to greater institutional allocation.”

———

Notes:
[1] 2026 Industry Data & Analysis – GPCA
[2] Private credit in emerging markets surges to record, industry group says | Reuters

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Grant Webster

Conflict-related commodity market disruption is just the latest in a series of shocks testing policymakers and unsettling investors. Yet a familiar pattern is playing out in markets.

Grant Webster, Co-Head of EM Sovereign & FX: “Historically, EMs have borne the brunt of supply shocks, but in recent years resilience has become a more common theme. From the post-COVID energy/inflation shock to last year’s trade tariffs and now war in Iran, the initial EM sell-off has been brief and EM outperformance has ensued. At the same time, developed markets have faced rising yields and higher volatility, blurring^[1] the traditional distinction between EM and DM risk. Behind this lies relative strengthening in EM, with prudent fiscal policy, healthier current accounts and proactive central banks all boosting resilience. Investors and rating agencies are increasingly recognising these improvements, with the current EM upgrade cycle among the strongest seen in recent decades. Given this relative policy strength and higher real yields, we believe that EMs are better placed to withstand inflation headwinds.”

Looking ahead, the key question is whether renewed supply shocks could trigger another inflationary episode similar to 2022, when inflation peaked at around 8% in EM^[2] and 7% in DM.

Webster continued: “There will be winners and losers, but the backdrop is very different to 2022 when inflation forecasts had already risen sharply before Russia invaded Ukraine. Since February, EM inflation expectations have only increased by c.50bps and while a further rise is likely, high real rates across EM give central banks a lot more room to manoeuvre than their DM counterparts.”

That resilience is also visible at the corporate level, where many EM companies are used to operating with higher rates and inflation than their developed market peers.

Alan Siow, Co-Head of EM Corporate Debt: “Coupled with the strength of activity data we see across much of the EM universe, that means that EM economies should be better placed to deal with inflationary pressures arising from the supply shock vis-à-vis their DM counterparts.”

Broader lessons from the Middle East

The market reaction to war in Iran is also informative through a more regional lens. While Middle Eastern markets initially came under pressure, the reaction proved short-lived. Credit spreads have already fallen back to pre-war levels, credit ratings have been largely unscathed and bond issuance is continuing and receiving strong investor demand.

Victoria Harling, CIO – Middle East and Co-Head of EM Corporate Debt: “The resilience we’ve seen in Middle Eastern markets reflects a macroeconomic transformation: many economies have worked hard to reduce their reliance on oil exports and that’s really paying off.”

The region is also benefiting from efforts to position itself as a strategic commercial and financial hub in an increasingly multipolar world^[3]. Drawing parallels with the City of London in the early 2000s, Alan Siow “Authorities have made it abundantly clear that the region is open for business, and the number of global companies establishing a presence there is rising. At the same time, the region’s bond markets are becoming bigger, broader and deeper.”

Alongside economic reform, the region is also undergoing rapid social and cultural change. Archie Hart, Emerging Markets Equity Portfolio Manager: “From the vibrant social scene in an increasingly multicultural Saudi Arabia to plans for the region’s first casino in the UAE, the Middle East is changing and fast. Coupled with a raft of favourable characteristics – from time zone to connectivity – this is one of the most exciting regions for investors today.”

Energy market dynamics – a structural growth story for EM investors

While the oil price shock is a global challenge, energy market dynamics are also providing a rich EM-centric opportunity set for investors. Rising energy demand is coinciding with constrained and disrupted supply. Crucially, this is coinciding with a clean tech sector transformation. Solar modules, batteries and electric vehicles (EVs) have become the cheapest options available for EM economic and sustainable development, as China’s ambitious manufacturing and deployment rollout has pushed prices down at extraordinary speed.

Matt Christ, Emerging Market Transition Debt Portfolio Manager: “These improved economics have expanded the commercial opportunity set in EM and many of the associated investment opportunities reside in the private credit world. We’ve made deals across the energy value chain – wind power generation in the Philippines, energy transmission lines in Brazil, a renewable data centre provider in Latin America, and Egypt’s first sustainable aviation fuel production facility.”

Private deals in emerging markets also offer investors a favourable risk/return profile^[4], which contrasts with a loosening of underwriting standards in the US. Alper Kilic, Head of Alternative Credit: “Across EM, we’re seeing investment opportunities that tick multiple boxes for investors: exposure to structural growth themes, attractive yields and strong deal protections – on loans to fundamentally strong borrowers.”

AI – a disruptor and enabler

The examples above help explain how the EM private credit opportunity set is inherently heavy-asset, low-obsolescence (HALO).

Kilic noted: “These capital-intensive, physically irreplaceable assets contrast with the asset-light, software services business models that are increasingly prevalent in the US private credit market and appear most exposed to risks from AI disruption.”

In EM equities, too, there are compelling comparisons to be made with the US around AI.

The AI boom increasingly depends on hardware. A small group of EM firms sit at the physical limits of that infrastructure; the “Secret Seven”^[5] may represent one of the most overlooked opportunities in global equities today.

“Against a backdrop of a global shortage of chips, AI-driven memory demand is creating an enduring tailwind for South Korea’s Samsung Electronics. SK hynix is another Korean firm benefiting from the memory upcycle underpinning AI infrastructure spend. Elsewhere, a number of companies are well-placed in the context of Taiwan’s AI-export complex and data centre supply chain demand. Some of these businesses trade at multiples that are just a fraction of the lofty valuations seen in the US today,” said Hart.

Meanwhile, CATL is an example of a listed Chinese company with a true global edge: its EV Qilin battery supports a 1,000 km driving range on a single charge. The pace of AI development in the physical economy in China is also accelerating rapidly, including advances in autonomous humanoid robotics, as evidenced by a robot breaking the human half-marathon record.

Hart: “There are increasing parallels with the dotcom bubble, when EM equity valuations remained relatively low while parts of the US stock market overheated. The years that followed saw strong EM outperformance after the bubble burst. Today, we see similar dynamics emerging, making this the most compelling entry point for EM equities I’ve seen in 25 years.”

Reasons to recalibrate investment views

From a more structural perspective, even as resilience strengthens the risk profile of EM assets, an enduring premium remains.  Siow: “While the EM corporate credit universe is highly diverse and it’s vital to take a selective investment approach, the overall compensation for risk is generous. Across the EM universe, country-specific concerns often overshadow a company’s underlying fundamental strength, pushing yields above those offered by DM bonds of a similar credit quality.”

This phenomenon extends to the private market space.

“In the EM private credit world, the reason for the favourable risk/return profile is an enduring barrier to entry. The inherent complexity of these markets and the years required to build local expertise and origination networks mean competition remains limited, and the premium shows little sign of eroding,” said Kilic.

Taking a wider lens, with Hungarian 10-year government bond yields now within around 75bps of their UK equivalents, there is a strengthening case for taking a more holistic view of global investment allocations.

Jaspal Boparai, Co-Head of UK Institutional: “With supply shocks becoming the new norm, traditional asset class behaviour shifting and old EM/DM distinctions breaking down, investors must rethink how they build resilience and diversification in their portfolios while positioning themselves for a transforming world.”

———

Notes:
[1] https://ninetyone.com/en/insights/reframing-fixed-income-the-old-rules-are-no-longer-fixed
[2] Ninety One estimates exclude India (incomplete data set), Turkey (extreme values).
[3] https://ninetyone.com/en/insights/the-end-of-easy-globalisation
[4] https://ninetyone.com/en/insights/private-debt-hidden-strengths-in-emerging-markets
[5] https://ninetyone.com/en/insights/the-secret-seven-undervalued-firms-at-the-heart-of-ai-infrastructure

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Sahil Mahtani

The era of “easy globalisation” is over. Investors and policymakers now face a more fragmented, volatile and politically charged global system, in which long-standing assumptions about growth, inflation and market stability are increasingly unreliable.

In The end of easy globalisation^[1], Ninety One Investment Institute Director Sahil Mahtani sets out how the model that underpinned the global economy for the past three decades — characterised by US-led stability, cheap commodities and broad political consensus — is breaking down. In its place, a more complex and less predictable environment is emerging, shaped by geopolitical competition, resource constraints and rising domestic political pressure.

Sahil Mahtani, Director, Investment Institute: “Globalisation isn’t ending — but it’s no longer happening on easy mode.  The assumptions that defined the last 30 years are now being challenged all at once.”

Three structural forces are driving this shift.

First, the return of multipolar geopolitics. The post-Cold War era of US dominance is giving way to a more fragmented system, with power dispersed across the US, China and a growing group of influential middle powers across the Gulf, Asia and beyond. As a result, competition is increasingly playing out in “grey zones” — from trade policy and technology to cyber and industrial strategy — rather than through direct military confrontation.

Recent developments underscore this shift. The US has become more selective in its global commitments, prioritising key regions and pushing allies to take on greater responsibility, while China has expanded its economic and geopolitical reach through trade, industrial policy and strategic partnerships. At the same time, countries such as India, the UAE and others are exercising greater autonomy, pursuing more transactional relationships with major powers. “We’re moving from a unipolar world to a more competitive, multipolar system where friction is the norm, not the exception,” Mahtani said.

Second, a shift from commodity abundance to constraint. For decades, the global economy benefited from cheap and readily available energy and materials, enabling long, efficient supply chains and keeping inflationary pressures contained. That backdrop is now changing.

Demand for commodities is rising sharply, driven by electrification, AI infrastructure, defence spending and the reconfiguration of global supply chains. At the same time, supply is becoming more constrained due to underinvestment, long project lead times and increasing geopolitical intervention.

The result is a world in which energy, metals and critical minerals are no longer neutral inputs, but strategic assets. Export controls, stockpiling and industrial policy are becoming more common, while access to key resources is increasingly shaping both economic and geopolitical outcomes. Recent disruptions to energy and food markets following Russia’s invasion of Ukraine, alongside growing competition over critical minerals used in clean energy and technology, illustrate how quickly these pressures can translate into real-world shocks.

Mahtani: “What used to be plumbing — energy, metals, supply chains — is now strategy.  Access to resources is becoming a defining feature of both economic and geopolitical power.”

Third, the rise of an “age of grievance”, as stagnant living standards, rising inequality and rapid demographic change fuel public dissatisfaction across major economies. In many countries, real wage growth has been weak for over a decade, while wealth gains have become increasingly concentrated.

At the same time, large-scale migration and ageing populations are reshaping labour markets and social dynamics, while social media is amplifying political polarisation and dissatisfaction. Together, these forces are contributing to a more volatile policy environment, with governments under pressure to prioritise national interests, economic security and domestic stability.

This shift is already visible in the retreat from free trade orthodoxy, the rise of industrial policy and growing scepticism towards global institutions. Trade relationships are becoming more transactional, and economic policy is increasingly intertwined with national security.

“Public dissatisfaction is no longer a background issue — it’s a primary force shaping markets, policy and international relations,” Mahtani noted.

Taken together, these forces point to a “fourth systemic crisis” — a crisis of global integration, in which economic, political and geopolitical pressures are becoming increasingly intertwined. Unlike previous periods of instability, this is not a single shock, but a broader regime shift in how the global system operates.

For investors, the implications are significant. Portfolios built for a world of stable inflation; predictable correlations and a single global growth engine are likely to prove less resilient in the years ahead. Instead, the environment is likely to be characterised by more episodic inflation, shifting correlations and greater divergence across countries and sectors.

Mahtani: “This isn’t a cyclical shift. It’s a structural reset in how the global system works.  Investors are navigating a world of higher volatility, fatter tails and greater dispersion — not a single, benign macro backdrop.”

Global integration is not reversing, but it is becoming more fragmented, politicised and harder to sustain. In this environment, resilience, diversification and adaptability are likely to become increasingly important as markets adjust to a more uncertain and uneven global landscape.

———-

Notes:
[1] The end of easy globalisation

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Alper Kilic

Private credit has grown into a roughly US$3 trillion global asset class since the Global Financial Crisis – but it’s now facing its first serious test. In the US, high-profile bankruptcies, a record credit default rate, and the increased use of payment-in-kind (PIK) structures^[1] are starting to expose the costs of loose underwriting in this increasingly crowded market. Exposure to AI disruption is adding further pressure. In contrast, dynamics are very different in emerging markets, which are relatively uncrowded and are dominated by asset-heavy, cash-flow generative borrowers.

Weakening dynamics in the US contrast with strength in emerging markets

Last year, two widely publicised failures revealed how recent trends in the US private credit market have allowed borrower distress to go undetected until it is too late. Key among these trends is the growth in ‘covenant-lite’ loan structures, which strip out the maintenance covenants – early warning systems for lenders.

While many considered these failures – of sub-prime auto lender Tricolor and auto-parts group First Brands – to be anomalies at the time, headlines and developments since the start of this year suggest they were early signals of a broader deterioration of credit standards. According to Fitch Ratings, the US private credit default rate reached 9.2% for the 12 months to January 2026^[2], its highest level since the index’s inception, while payment-in-kind¹ usage has risen sharply across publicly traded private credit vehicles (BDCs). What we are seeing today are the structural consequences of a market that grew too quickly – where competition has driven down yields and weakened structuring standards in a ‘borrower’s market’.

The US market’s exposure to AI disruption is concentrated in software as a service (SaaS) and business services — sectors where cashflows are less predictable and barriers to entry are falling. For investors, the contrast with emerging markets is increasingly stark.

In emerging markets, lending standards remain high, with lenders able to stipulate robust collateral protections and strong covenants. Deals are often made in collaboration with other banks, and stronger bargaining power allows lenders to take a conservative approach to underwriting deals. Furthermore, the opportunity set is dominated by asset-heavy, cashflow-generative borrowers with limited exposure to sectors most vulnerable to AI disruption.

For example, Ninety One recently provided a senior term loan to fund the expansion of a solar power operator in Brazil. The loan is backed by a portfolio of operating and development-stage solar assets across Latin America, offering robust collateral coverage and a full payment guarantee from the borrower’s US-listed parent company.  By focusing on the gaps in physical digital infrastructure and the associated energy demand, we believe the portfolios are aligned with the tailwind of AI disruption.

Alper Kilic, Head of Alternative Credit: “Unsecured term lending in emerging markets is rare, and borrowers tend to have much lower leverage, – typically 3-4x, compared to 6-7x in developed markets – and lower loan-to-value ratios – typically sub-40%, compared to 50-60% in developed markets – alongside durable market positions. In addition, loans are normally structured under US or UK governing law, with leading international legal firms and Big Four auditors involved. This is a very lender-friendly market.”

Today, it is not unusual to see well-known names – including the world’s biggest sovereign wealth funds – as deal sponsors and co-lenders, a clear vote of confidence in emerging market private credit. However, success depends heavily on structuring expertise and local market knowledge.

Nathaniel Micklem, Co-Head of Emerging Market Alternative Debt: “Building on almost two decades of experience, we make sure our investments feature multiple layers of protection. We look for borrowers with low corporate leverage, favour blue-chip market leaders, and structure deals to include robust covenants. Limited competition gives us good bargaining power, while a focus on strong sponsors and markets where infrastructure assets enjoy sovereign support provides an additional level of comfort.”

Senior-secured yields, without the structural compromises

What makes the emerging markets private credit opportunity particularly striking is where the return premium sits in the capital structure. In US direct lending, achieving attractive yields often requires accepting structural subordination or levering a fund vehicle. In emerging markets, the premium is available at the senior and senior-secured level – a reflection of origination complexity and lender bargaining power; investors are compensated for expertise and access, not for taking on additional credit risk.

“The yield pick-up in emerging markets is significant, despite strong borrower fundamentals. For example, one of our US dollar-based loans – to fund an ambitious EV expansion programme in a Turkish city – provides 200bps more yield than the public bond issuance from the same municipal issuer,” said Matt Christ, Portfolio Manager, Emerging Market Transition Debt.

Structural growth is creating compelling investment opportunities across key themes

Private credit in emerging markets is supported by powerful structural tailwinds. Growing populations and rising demand for utilities, goods and services are fuelling financing requirements, with private credit increasingly financing renewable energy generation, digital connectivity infrastructure and electric mobility platforms across the developing world. In addition, the rapid growth of AI is creating new investment opportunities; last year, Ninety One lent to two data centre operators in Latin America that have committed to maintain or increase the share of their energy sourced from renewables to 100%.

Crucially, these sectors benefit from powerful structural demand growth while offering lenders stable cashflows and tangible collateral.

Kilic: “The emerging market private credit opportunity set is inherently asset-heavy – think power generation, transmission infrastructure, water and industrial transition projects. These capital-intensive, physically irreplaceable assets contrast with the asset-light, software services business models prevalent in the US private credit market, which are more exposed to AI disruption.”

Example deals across Ninety One’s platform include:

• Senior secured debt finance for a Vietnamese renewable company with >100MW of operational assets seeking to raise platform financing to support platform expansion.
• A senior investment loan to fund infrastructure development and facilitate the building of apartments targeting low- to middle-income homeowners in South Africa.
• A senior secured term loan to a leading third-party cold storage logistics supplier for the food and agriculture business in Latin America.

Martijn Proos, Co-Head of Emerging Market Alternative Debt: “Expanding infrastructure requirements are creating an abundant deal pipeline. And by directing capital towards essential transport, energy, water, urban infrastructure and digital communication infrastructure, investors also contribute to social& economic development and environmental sustainability.”

Experience is an enduring barrier to entry

The inherent complexity of these markets and the years required to build local expertise and origination networks mean competition remains limited, and the premium shows little sign of eroding.

Investors need local-market experience to recognise where risk is mispriced and extensive expertise in deal structuring. Today, only a limited number of investors are seasoned in this space. A broad and deep origination network – something that cannot be bought or created overnight – also helps to ensure diversification and allows lenders to select the best opportunities.

Kilic concluded: “Developed markets private credit has become a crowded trade. In emerging markets, it remains a lender’s market – and that makes all the difference.”

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Sahil Mahtani

War in the Middle East and the disruption of energy flows through the Strait of Hormuz has potentially introduced a stagflationary shock at a time when markets were positioned for a goldilocks or reflationary backdrop. There are three parallels to the early 2020 dynamic that investors should note, according to Sahil Mahtani, Director, Investment Institute.

At first glance, early 2020 may seem an odd analogy for the current moment. The Iran crisis of 2026 is not a natural disaster or an accident but a deliberate act. And the economic transmission mechanism is different: while the Covid lockdowns created both a supply and demand shock, this is primarily a supply shock. But the comparison is still useful because, in both cases, markets may have recognised the event without fully pricing the second and third-order implications.

The first reason this could prove to be an early 2020 moment is simply the starting point. In both cases, this inherently stagflationary shock has arrived as markets were positioned for a Goldilocks environment. In early 2020, markets expected S&P 500 earnings to grow around 9% while interest rate markets were positioned for one cut by the end of the year. At the start of 2026, the S&P 500’s 2026 and 2027 year-on-year earnings estimates are +16%. For the ACWI, it is 17% and 14%, respectively. Meanwhile, SPY/TLT, which measures how US stocks are performing relative to longer-term bonds and is a simple measure of market expectations for future growth, is down just 5% from the February peak, while the dollar has firmed.

In other words, markets were pricing in above-trend growth, mild disinflation and a healthy backdrop for cross-asset returns despite elevated valuations.

Part of the reason for the sanguine price action is that markets have internalised the lesson of fading geopolitical shocks. Strategists are showing variants of the same table itemising previous geopolitical risk episodes and making the case that risk markets have typically ended up higher 12 months after previous such episodes. The Atlantic energy benchmarks that financial markets typically look at are also not reflecting the disruption to energy markets as much as Asian energy and product benchmarks. For instance, WTI ended last Friday (March 20) lower than the previous week, even as Singapore jet fuel rose 12% in the same period.

The second reason this could be an early-2020-type moment is that markets may be pricing the wrong policy destination (partly because they are underestimating the hit to growth). Currently, pricing transmission seems to be higher oil prices, higher headline inflation, more hawkish central banks and higher yields. That is due to some early economic data, but primarily hawkish central bank speak. Hence markets have priced in three more hikes this year in the UK, three in the eurozone, and at times have leaned toward a hike in the United States. Ultimately, we think markets are assuming a more hawkish central bank reaction function than will eventually apply.

Indeed, the initial headline inflation shock could be large, especially in Europe and Asia. In Europe, the inflation shock is likely to be around 150bp. But there is likely to be much less persistent pass-through to inflation than in the wake of the 2022 Ukraine war shock, given restrictive monetary policy and more limited pandemic-style fiscal intervention. Should worse war and energy scenarios materialise, financial conditions will tighten further, and the growth impact will ultimately be weaker. Should European central banks worry about the un-anchoring of inflation expectations, they will hike. But the combined effects of energy and terms-of-trade shocks, along with tighter financial conditions, would, in our view, push economies towards very weak growth and create medium-term downside risks to inflation

The third reason we may be in an early 2020 moment is that the commodity shock is likely to reverberate for months in ways not captured by the Atlantic benchmarks alone. True, the oil intensity of global GDP is far lower than it was in the 1970s, but product markets are already showing the non-linear effects of the shock. Jet fuel, bunker fuel and naphtha have risen faster than crude. Nearly half of global methanol supply comes from the Gulf region and the Gulf accounts for 43% of global urea, 44% of global sulphur and 27% of global ammonia supply. Those inputs run through plastics, packaging, fertilisers, construction, chemicals and transport. Meanwhile, markets are still trying to price the impact of global plant closures or plant damage in the Persian Gulf.

Countries have already begun introducing export controls (Thailand, China), price caps (South Korea), reserve releases (IEA 32-country coordinated release), tax cuts (Vietnam, Austria), shorter workweeks (Thailand, Philippines, Pakistan, Bangladesh) and coal or nuclear restarts (Japan and South Korea). That is exactly what one would expect when a physical energy shock starts pushing governments to act. This is concentrated in Asia more than in other places because that is where energy resources that pass through Hormuz primarily flow.

The closure of the Strait of Hormuz is one of two geopolitical events that strategists have always worried about (the other being Taiwan), and the removal of 10-15% of global oil flows and 3% of global natural gas consumption is a major shock even to hitherto oversupplied energy markets. If energy product market stress persists, if more countries intensify demand-restraint measures, and if financial markets continue to treat the episode as a manageable inflation scare rather than a growth shock, then the gap between physical reality and financial pricing could close abruptly.

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If Iran were to, for example, use drones to close shipping lanes, that would be a major escalation. It would also be met with massive retaliation, not to mention the fact that Iran’s own oil exports rely on the Strait. Historically, the Iranian regime has not been a reckless gambler and has been more likely to play for time than to pursue actions that pose existential risk. Retaliation has frequently been more performative than escalatory. However, given the death of most members of the leadership team, the behaviour of Iran’s current leadership is untested. Already, Iranian foreign minister Aragchi has noted that some of Iran’s military units are independent and isolated, acting on their own with general instructions provided in advance.

Devolution of authority to local units has allowed Iran to avoid the paralysis it exhibited on the first day of the 12-Day War in June 2025, but it also increases risks. Ultimately, a Hormuz closure scenario remains a low-probability, high-impact tail risk. That is the critical variable for whether attacks remain contained or spiral into a broader conflict. As of the night of Sunday, 1 March, we expect that the conflict will last weeks, not days. However, the critical variable is not length but intensity. There are significant downside tail risks if the domestic transfer of power in Iran were to be contested with force, leading to a Syria-type civil war. There are, however, upside tail risks if the new Iranian leadership were to change its attitude towards the United States and negotiations were to commence.

In the short term, should an Iranian response to the American and Israeli operation, which has been planned for months, include closing shipping lanes or attacks on regional infrastructure in Saudi Arabia and the UAE, the impact on financial markets would operate mainly through the oil price, which has already priced in higher risk premia despite efforts by OPEC to increase supply. Macroeconomically, it would operate through the uncertainty channels as embedded in the US Federal Reserve Board and New York Fed models. The effect would be stagflationary, i.e., inflation rising and growth slowing.

A 30% real increase in oil prices would, on those estimates, lift headline inflation by around 1 percentage point over a year while reducing output growth by roughly 0.13 percentage points, with the uncertainty channel amplifying these effects further. The effects on inflation expectations could also be significant, depending on the size and duration of the ultimate shock. That may complicate the Fed’s path lower this year. However, energy equities and energy-linked sovereigns can benefit, even as energy importers (such as Japan and India) face a higher import bill.

The crisis in Iran was well telegraphed, but it arrives at a time when markets are already digesting significant churn beneath the headline index numbers. Under the surface, fragility has been evident in sharp first-quarter sector rotations, most notably the sell-off in software and emerging cracks in developed-market private assets. The spread of agentic AI has prompted a reassessment of traditional SaaS moats. The IGV software ETF is down around 20% year to date, and valuation multiples for prominent software names have compressed. That weakness has spilt over into publicly listed developed-market private credit vehicles with heavy software exposure, particularly US Business Development Companies. At the same time, investors have reassessed businesses with tangible assets and lower perceived obsolescence risk, amid concern about rapid AI diffusion, especially across labour markets. Some software firms have responded by cutting headcount and trimming future stock-based compensation.

There was also a marked sell-off in metals prices in January after a sharp run-up. The dollar remains lower year to date. In short, markets were already adjusting before this latest geopolitical escalation. That adjustment has been partially absorbed because growth remains firm and inflation is easing. There is also a reflexive element. Strong asset prices have coincided with a low savings rate, supporting consumer spending in the upper half of the K-shaped recovery. The key question now is whether events in Iran disrupt that balance, and we will update our views accordingly.

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Deirdre Cooper

Sentiment towards decarbonisation has weakened in recent years, but underlying earnings performance has remained resilient. High-quality enablers of the energy transition have continued to deliver strong, above-market earnings growth, even as valuations compressed amid policy uncertainty and higher interest rates — creating what investors see as a compelling entry point.

“Sentiment may have faltered over the past few years, but earnings have not,” said Deirdre Cooper, Head of Sustainable Equity. “High-quality enablers of decarbonisation have continued to deliver strong, above-market earnings growth, even as valuations compressed amid policy uncertainty and higher interest rates.”

Recent months have seen a recovery across clean-tech markets. While some lower-quality companies may simply be rebounding from oversold levels, others are demonstrating a more durable path to long-term value creation. Improving sentiment has been driven by structurally rising power demand in developed markets — particularly from data centres and industrial electrification — alongside accelerating, cost-driven adoption of clean technologies in emerging markets.

“What we saw in 2025 was an energy transition increasingly driven by economics, technology and efficiency gains, rather than policy cycles,” Cooper said. “We expect this shift to continue this year and beyond, with the clean-tech market projected to triple in value to >US$2.1 trillion by 2035.”

An accelerating transition with new growth engines

The energy transition continues to advance, but its drivers are evolving. Emerging markets are now a central force, with clean technology reaching cost parity — or better — with fossil alternatives across much of the developing world.

“The energy transition is still on, and it is accelerating in new ways,” said Cooper. “Emerging markets have become the growth engine of the transition.”

China’s scale and cost leadership in solar, wind, batteries and electric vehicles is reshaping global adoption patterns, enabling countries to electrify and industrialise more cleanly and affordably. Nearly half of China’s clean-tech exports now go to emerging economies, accelerating deployment across markets such as India, Thailand and Brazil.

Cooper continued: “Emerging markets are transitioning not primarily due to policy, but because clean technology makes economic sense.  China’s scale and cost leadership in solar, wind, batteries and electric vehicles are transforming access to affordable clean energy across the developing world.”

Developed markets face rising power demand and efficiency needs

In parallel, developed markets are experiencing a sharp inflection in electricity demand after decades of flat consumption. Artificial intelligence, data centres, electrified heating and cooling, and industrial reshoring are driving a renewed focus on power generation, grids and efficiency.

Cooper continued: “This has turned utilities, grid operators and efficiency specialists into some of the most important enablers of the next economic growth wave. From Amazon to Coreweave, investors in AI datacentres are increasingly calling out access to power as the key bottleneck to delivering on their plans.”  This combination of rising demand and decarbonisation goals is creating significant opportunities for utilities, grid operators and companies enabling energy and industrial efficiency.

“With policy headwinds fading and fundamentals strengthening, we think developed-market clean-tech leaders have potential for a more sustained phase of growth than the broader market appears to believe as part of an all-of-the-above energy solution,” Cooper stated.

Technology expands the investable opportunity set

Advances in electrification and efficiency are broadening the scope of decarbonisation across the global economy. Today, more than 75% of final energy demand can be electrified, up from around 50% in 2000, creating new opportunities across industrial electrification, power semiconductors and energy-efficient infrastructure.  Cooper noted: “Efficiency is a critical lever both for reducing emissions and enabling new sources of power demand like data centres in an increasingly electricity short world. This creates opportunities for companies whose technologies enable smarter, cleaner and more efficient use of energy across industries.”

Beyond power and industry, innovation is also unlocking differentiated opportunities in areas such as precision agriculture, where targeted solutions can address emissions from food systems, which account for around 30% of global emissions.

Positioning for the next phase of the transition

Portfolio positioning reflects this evolving landscape, balancing defensive exposure with structural growth opportunities while increasing emphasis on emerging markets.  “Our focus remains on identifying companies with structural growth, durable competitive advantages and the ability to compound returns through cycles,” Cooper said. “The portfolio is balanced between defensive utilities that meet surging power demand in developed markets, and high-growth enablers of electrification, resource efficiency and indu

After a period where sentiment diverged sharply from fundamentals, markets may now be turning in favour of active investors.  “The ‘transition of the energy transition’ — from developed to emerging, and from policy to technology and economics — is creating new opportunities for high-quality decarbonisation solution providers,” Cooper concluded.

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Darpan Harar

After a strong run for global credit markets in 2025, investors heading into 2026 face a more complex and selective environment.  Credit markets delivered robust total returns last year, supported by tightening spreads that ended 2025 near 10-year lows in some segments. However, with valuations now stretched and the risk of spread normalisation rising, investors will need to work harder to protect capital and generate returns.

Darpan Harar, Portfolio Manager, Multi Asset Credit: “Credit markets delivered robust total returns in 2025, after shrugging off short-lived wobbles around political risk. If spreads widen and revert to more ‘normal’ levels this year, investors could see these gains eroded – that’s an important risk to navigate.” 

Credit still offers income, but not all yield is equal

While government bond yields remain elevated, volatility and growing concerns around public finances have undermined risk-adjusted returns in sovereign markets. Against this backdrop, credit continues to offer an attractive source of income — provided investors are selective.  Justin Jewell, Portfolio Manager, Multi Asset Credit: “Credit still offers a great source of income, which is a key driver of long-term investment returns, but not all yield sources are equal.”

Rather than narrowing opportunity sets, selectivity requires casting a wide net across global credit markets, including specialist areas that may offer diversification and protection against interest-rate risk.  “By exploring specialist areas of the market, investors can limit their exposure to interest-rate risk relative to more mainstream markets,” Jewell noted, highlighting the role of floating-rate structures in an uncertain monetary policy environment.

Systemic risks remain contained, but fundamentals matter

Recent high-profile stresses in parts of the US private credit market have raised concerns about broader systemic risks. These pressures remain contained and are largely explained by excesses built up during the leverage buyout boom of 2020–2022.

“We do not think this is a systemic issue,” Harar continued. “Stress has been relatively contained and is largely explained by a hangover from the leverage buyout boom.”  Public credit markets present a different picture. Despite becoming more expensive, areas such as high yield have generally maintained stronger average credit quality, with the riskiest lending increasingly taking place outside public markets. Even so, careful analysis of underlying fundamentals remains essential given the wide dispersion in creditworthiness.

Shifting supply and demand will increase dispersion

After several years of supportive technical conditions, supply-and-demand dynamics are set to change. Increased issuance — particularly linked to investment in artificial intelligence — will lift supply, while a fall in yields may dampen demand.  With credit spreads anchored at historically low levels, this combination points to higher volatility in parts of the investment-grade market. More favourable technical conditions are expected to emerge in specialist areas such as loans, bank capital and selected segments of the high-yield market. 

Positioning for a more demanding year ahead

As the era of “easy income and capital growth” draws to a close, credit investors will need to work harder. Tight spreads mean mainstream credit indices are likely to disappoint, while divergence across sectors and issuers is set to increase.

“A key characteristic of the environment in 2026 is likely to be increasing divergence across economic sectors,” Harar concluded, pointing to shifting consumption patterns and a widening gap between winners and losers across the corporate landscape.  This divergence creates a rich opportunity set for bottom-up investors. Portfolios are best constructed around a core of high-yielding issuers with defensive characteristics, while remaining active and flexible in capturing opportunities as they arise across the global credit universe.

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