If you weren't paying attention to emerging markets in 2025, you missed quite a show. While Wall Street had a decent year, developing economies absolutely crushed it, with the MSCI Emerging Markets Index climbing roughly 30% since January. That's the kind of performance that makes portfolio managers start reconsidering their geographic allocations.
Some individual countries delivered even more impressive returns. Greece led the pack with its Athens Composite Index soaring nearly 44% over the year. Chile and the Czech Republic also posted standout performances, hitting record highs as 2025 wrapped up. Greece's run has been so strong that it's expected to get promoted to developed market status come September 2026, which is basically the investment world's equivalent of making varsity.
At a November roundtable in London, fund managers at Ninety One, which oversees more than $203 billion in assets, laid out why they're bullish on emerging markets heading into 2026, according to CNBC. Portfolio manager Varun Laijawalla called 2025 a "year of change" across multiple sectors, pointing to shifting dynamics that could sustain momentum.
One major catalyst? The U.S. dollar finally weakened after what Laijawalla described as "15 years of a one-way trade." That matters enormously for emerging economies that rely on foreign capital, because a softer dollar reduces the local currency cost of their dollar-denominated debt. It also tends to attract investment flows from overseas, creating a virtuous cycle.
Mislav Matejka, Head of Global and European Equity Strategy at JP Morgan, shared similar optimism during remarks at the bank's London headquarters. He predicted emerging markets are poised for a second consecutive year of outperformance in 2026, driven by attractive valuations, favorable currency movements, and solid economic growth patterns.
The combination of these factors suggests 2025's rally wasn't just a flash in the pan. With valuations still compelling compared to developed markets and macroeconomic winds shifting in their favor, emerging markets appear well-positioned to extend their winning streak into the new year.
