⏳ Reading Time: 3 minutesThe recent recovery in equity markets has been quite sharp. Within that, the performance of Emerging Markets (EM) equities has been notable – reflecting the increasing dominance of technology stocks within the EM universe.
The chart below shows year-to-date performance for equity ETFs representing Europe, Emerging Markets and the Nasdaq (in GBP). EM has led the charge, up an impressive 20% so far this year. It’s also notable that it has matched the recovery in the Nasdaq since late March, whereas European equities have struggled a bit more.
We think the contrast is important because, as we’ve noted before, these are not the Emerging Markets of twenty years ago. Back then, Technology was around 10% of the EM equity universe, while commodities (energy and materials) were around 40%. Today, those figures have virtually reversed, with the tech weight sitting at around 38%, and commodities closer to 10%. And that has implications for what will drive EM equity returns going forward.
In terms of earnings growth, expectations for Emerging Markets this year are extremely strong. The chart below shows expected earnings growth for 2026 in EM, Europe and the US – with EM comfortably outpacing the others. More interestingly, those estimates have been revised up sharply from the start of the year – reflecting increased confidence about the outlook for tech spending.
