Emerging markers rally despite global turmoil: Developing economies are posting some of the strongest market gains of 2025 as the winds of US exceptionalism start to turn, defying expectations that trade wars resulting from US tariffs and ongoing conflicts in the Middle East would hit emerging markets particularly hard.

An MSCI share gauge and JPMorgan EM local currency bond index posted gains of roughly 10% this year, nearly double the 4.8% gain seen in developed markets tracked by the MSCI World index, the Financial Times reports.

Driving the turnaround: Weakened confidence in the US on the back of increasingly erratic policy stances have shed a more positive light on emerging markets, and the growing US budget deficit and debt obligations are pulling investors away from US Treasuries, despite favorable yields. A weaker greenback is also easing pressure on central banks in emerging markets, allowing them to lower borrowing costs, helping to boost growth.

This comes after a somewhat rocky start to the year, with USD 22 bn removed from EM shares and bond funds. Some USD 11 bn returned later in May and June, with emerging market local-currency bond funds seeing record inflows in mid-June, Reuters reported, as investors look elsewhere amid lower interest rates in developed markets, a slowdown in global growth, and an anticipated downturn in USD bond yields.

The MSCI Emerging Markets index could gain as much as 3% by June 2026, with domestic-focused businesses better positioned than exporters, Morgan Stanley strategists predict in the 2025 Midyear Investment Outlook. The firm projects India to lead emerging market performance, forecasting 18-20% annual earnings growth over the next four to five years.

The next bull market? Wall Street players like Morgan Stanley Investment Management, AQR Capital Management, Bank of America and Franklin Templeton among those predicting that the tide is turning in favor of EMs — calling them “the next bull market,” — Bloomberg reports citing Bank of America’s Michael Harnett.

Investor bullishness on emerging markets is at a two-year high, with 44% of fund managers expressing optimism, Bloomberg reports, citing a HSBC survey. The consensus view expects emerging market equities to outperform developed markets over the next three months.

MARKETS THIS MORNING-

Most Asian markets are in the red this morning, with Japan’s Nikkei being the only outlier, rising 1%. South Korea’s Kospi lost 1.8%, while Hong Kong’s Hang Seng is down 0.7%. Over on Wall Street, futures are unchanged, after the S&P 500 ended yesterday flat, and the Nasdaq and Dow Jones logged small gains.

ADX

9,811

+0.2% (YTD: +4.2%)

DFM

5,613

+0.4% (YTD: +8.8%)

Nasdaq Dubai UAE20

4,599

+0.0% (YTD: +10.4%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.3% o/n

4.3% 1 yr

TASI

10,974

+0.1% (YTD: -9.0%)

EGX30

33,003

+1.2% (YTD: +11.0%)

S&P 500

6,092

-0.0% (YTD: +3.6%)

FTSE 100

8,719

-0.5% (YTD: +6.7%)

Euro Stoxx 50

5,252

-0.9% (YTD: +7.3%)

Brent crude

USD 67.74

+0.1%

Natural gas (Nymex)

USD 3.40

-0.2%

Gold

USD 3,349.80

+0.2%

BTC

USD 107,906.69

+1.8% (YTD: +14.2%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.66

0.0% (YTD: +2.6%)

S&P MENA bond & sukuk

145.1

+0.4% (YTD: +3.7%)

VIX (Volatility Index)

16.76

-4.1% (YTD: -3.4%)

THE CLOSING BELL-

The DFM rose 0.4% yesterday on turnover of AED 698.7 mn. The index is up 8.8% YTD.

In the green: Al Mazaya Holding Company (+14.9%), Agility The Public Warehousing Company (+4.8%) and Taaleem Holdings (+3.8%).

In the red: Al Mal Capital REIT (-8.8%), Ekttitab Holding Company (-4.2%) and Dubai National Ins. and Reinsurance PJSC (-4.0%).

Over on the ADX, the index rose 0.2% on turnover of AED 1.3 bn. Meanwhile, Nasdaq Dubai remained flat.

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