Emerging Capital Markets Newsletter – 1Q26

Emerging markets showed divergence during the quarter mainly due to ongoing war and global geopolitical tensions, along with country-specific issues that increased volatility and pushed inflation higher. Indian equities declined because of high valuations, while China and Brazil became more attractive due to supportive government policies and fiscal measures. The outlook for next year looks positive across these countries with growth opportunities, but it is important to remain mindful and take a balanced approach to exposure, keeping in view potential risks such as any escalation in war or sanctions, while also being open to opportunities that may emerge.