Resilience and divergence: Emerging markets are forging ahead in a new era for investors

Conflict-related commodity market disruption is just the latest in a series of shocks testing policymakers and unsettling investors. Yet a familiar pattern is playing out in markets. Historically, emerging markets (EMs) have borne the brunt of supply shocks, but in recent years resilience has become a common theme. From the post-COVID energy/inflation shock to last year’s trade tariffs and now war in Iran, the initial EM sell-off has been brief and EM outperformance has ensued. At the same time, developed markets (DMs) have faced rising yields and higher volatility, blurring the traditional...