Emerging market equities had their best year since 2009 in 2025, and they’re poised to keep their momentum in 2026. Not only are EM stocks outperforming their US peers, but the gap between emerging markets’ bond yields and US treasuries is currently at its smallest in 11 years, Bloomberg reports. Plus: The MSCI Emerging Markets Index is up 28.2% for the year.

The name of the game for investors this year was diversifying from the US amid concerns around the unpredictability of US policy, a weakened USD, and an improvement in the debt profiles of EMs, diverting more capital than has been seen in decades towards EMs. Bank of America’s head of emerging fixed income David Hauner put it best: “EM bears have gone extinct.”

Forecasts for next year are rosy: JPMorgan expects USD 50 bn in inflows into EM debt funds next year, while Citigroup sees emerging bonds delivering a 5% return.

Investors remain underexposed to EMs, especially after the past few years saw massive outflows resulting from rising interest rates, post-covid headwinds, and geopolitical conflicts, which could be a big part of what’s driving the shift now.

Yes, but: A potentially stronger USD next year could lead to smaller EM gains, especially if the US Federal Reserve delivers fewer interest rate cuts than expected. Still, most analysts are recommending that investors diversify their portfolio and invest in local-currency-denominated EM debt.

Plus: Concerns of an AI bubble are leading to intense volatility in the US. This is causing a shift to investments in Chinese AI and tech stocks as one alternative to the US, as investors look to plow funds into AI-backed securities, but want to steer away from fears of the “circular” AI investment boom in the US.

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EGX30

41,253

-0.6% (YTD: +38.7%)

USD (CBE)

Buy 47.53

Sell 47.67

USD (CIB)

Buy 47.54

Sell 47.64

Interest rates (CBE)

20.00% deposit

21.00% lending

Tadawul

10,526

-0.1% (YTD: -12.7%)

ADX

10,033

0.0% (YTD: +6.5%)

DFM

6,134

-0.1% (YTD: +18.9%)

S&P 500

6,930

0.0% (YTD: +17.8%)

FTSE 100

9,871

-0.2% (YTD: +20.8%)

Euro Stoxx 50

5,746

0.0% (YTD: +18.0%)

Brent crude

USD 60.64

-2.6%

Natural gas (Nymex)

USD 4.37

+2.9%

Gold

USD 4,533

+1.2%

BTC

USD 87,656

+0.3% (YTD: -6.4%)

S&P Egypt Sovereign Bond Index

987.9

+0.1% (YTD: +27.1%)

S&P MENA Bond & Sukuk

151.73

+0.1% (YTD: +8.4%)

VIX (Volatility Index)

13.60

+1.0% (YTD: -21.6%)

THE CLOSING BELL-

The EGX30 fell 0.6% at Thursday’s close on turnover of EGP 5.2 bn (4.8% below the 90-day average). Local investors were the sole net buyers. The index is up 38.7% YTD.

In the green: Juhayna (+3.5%), Orascom Construction (+3.1%), and Valmore Holding (+2.6%).

In the red: Qalaa Holdings (-2.2%), CIB (-1.8%), and Raya Holding (-1.8%).

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