IEMG Overview

Emerging Markets Potential: Investors may be underestimating the potential of emerging markets as a strong performer in 2025.

Market Performance Outlook: Emerging markets are projected to be among the top market performers, suggesting a shift in investment focus may be beneficial.

Emerging Markets vs. Developed Markets: The ratio of emerging markets to developed markets stocks has hit a historic low, similar to previous instances in 1988 and 2002, which led to significant outperformance of emerging markets in subsequent years.

Current Investment Landscape: Despite the focus on U.S. tech stocks and the S&P 500, there are emerging opportunities in international stocks, particularly in emerging markets, which have shown strong year-to-date returns compared to their developed counterparts.

Valuation Discrepancies: The current price-to-earnings ratio for the iShares Core MSCI Emerging Markets ETF is significantly lower than that of the Vanguard S&P 500 ETF, indicating a potential value opportunity for investors in emerging markets.

Macro Economic Conditions: Evolving macroeconomic conditions, including moderating inflation and declining interest rates, may create a favorable environment for emerging markets, suggesting that a shift in market leadership could be on the horizon.

ETF Inflows: The DVGR ETF experienced the largest increase in inflows, adding 130,000 units, which represents a 38.2% rise in outstanding units.

Market Commentary: The views expressed in the article are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.

52-Week Range of IEMG: IEMG's share price has a 52-week low of $47.29 and a high of $69.465, with the last trade recorded at $67.53.

Understanding ETFs: Exchange-traded funds (ETFs) function like stocks, where investors buy and sell "units" that can be created or destroyed based on demand.

Monitoring ETF Flows: Weekly monitoring of shares outstanding helps identify ETFs with significant inflows (new units created) or outflows (units destroyed), impacting the underlying holdings.

Author's Views: The opinions expressed in the article are those of the author and do not necessarily represent the views of Nasdaq, Inc.

Economic Outlook: JP Morgan Asset Management anticipates a K-shaped economic recovery in 2026, with growth above 3% in the first half, driven by fiscal support, while inflation is expected to rise towards 4% before settling at 2% by year-end.

Key Policy Drivers: The bank identifies three main factors influencing economic volatility: increased U.S. tariffs impacting consumer prices, a decline in net immigration affecting job growth, and significant investments in AI projected to reach $588 billion.

Investment Strategy: JP Morgan advises investors to focus on fixed income and duration rather than yield levels, suggesting that TIPS and commodities remain relevant as inflation hedges, while also recommending a tilt towards value and international markets.

Global Market Trends: The firm highlights four structural themes, including revitalization of European and Japanese companies, the broadening impact of AI, increased fiscal spending in the Eurozone and Japan, and a global shift towards higher shareholder returns.

BRICS+ Economic Growth: The BRICS+ bloc, now including countries like Egypt and Saudi Arabia, has surpassed the G7 in global GDP measured by purchasing power parity (PPP), accounting for approximately 40% of the world's economic output compared to the G7's 28.8%.

Demographic Influence: BRICS+ nations represent 45% of the global population, with China and India alone making up about 35%, contributing to their sustained economic growth rates that significantly outpace the G7.

Shift to Multipolarity: The economic reversal between BRICS+ and G7 signifies a transition to a multipolar world, where economic influence is distributed across multiple centers rather than dominated by Western institutions.

Implications for Investors and Policymakers: As the unipolar era ends, businesses and investors must adapt to new regulatory environments and currency risks, while policymakers need to engage with emerging powers to navigate this evolving economic landscape.