There are plenty of factors that affect asset returns in individual countries, and plenty of factors that can influence near-term volatility as well. Nonetheless, the main factor that drives EM-wide returns over the medium term is exports, i.e., the global growth and trade cycle.

Going into 2026 we were inclined to look for a trend slowdown in dollar export growth this year on the back of staid commodity prices and uncertain global demand conditions ... but that's not how things have played out. This year has already brought two massive shocks in the form of (i) soaring oil and fuel prices and (ii) an explosion of Asian IT electronics export shipments tied to the AI investment boom, both of which have sent dollar export growth higher still. We don't have much visibility for 2027, either in oil or AI spending, so we're basically left holding our breath.