Emerging market equities are seeing strong capital inflows at the start of 2026, with institutional investors favouring select economies positioned for stable growth and exposure to global trends. More than $39 billion has entered EM equity funds so far this year, supported by improving macro conditions and increased use of single-country strategies.
A weaker US dollar and expectations of faster GDP growth in emerging economies have underpinned renewed interest. At the same time, investors are turning away from broad regional allocations and instead targeting countries with stronger monetary policy frameworks and clearer earnings visibility. Brazil and South Korea are among the markets benefiting from this shift.
One of the clearest signs of this rebalancing is Taiwan’s rise within the MSCI Emerging Markets Index. At the end of January, Taiwan’s index weight surpassed China’s for the first time since 2007. The change reflects investor confidence in Taiwan’s technology and semiconductor sector, which is closely tied to global demand for artificial intelligence infrastructure.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
