Doha: Qatar National Bank (QNB) revealed that the global macroeconomic framework for 2026 remains favorable for emerging market (EM) assets, despite ongoing volatility. The bank emphasized the growing importance of strategic investment selection, especially as a new global investment cycle aligns with favorable monetary conditions and potential rebalancing of portfolios. These factors place EM assets in a strong position to deliver positive performance, potentially outperforming those in advanced economies over the coming year.
According to Qatar News Agency, QNB, in its weekly commentary, stated, “After a prolonged period of underperformance, 2025 marked an important turning point for EM assets. Strong capital inflows, improving macro-financial conditions, and a more supportive global backdrop allowed EM equities to outperform US and other advanced market assets for the first time in several years. Data from the Institute of International Finance (IIF) showed that portfolio inflows to EM accelerated to USD
223 billion during 2025, supporting total returns of more than 34 percent in EM equities. This rebound was fueled by a weaker USD, easing global monetary conditions, and resilient growth across several large EM economies.”
The bank highlighted that 2026 is likely to be constructive for EM assets. Despite elevated idiosyncratic risks and persistent dispersion across countries, the global macro environment continues to generate powerful “push factors” favoring EM allocations. Three global forces are particularly relevant: the global cycle turning in a historically supportive way for EM, foreign exchange and interest rate dynamics that are broadly supportive, and potential portfolio rebalancing favoring increased capital allocations to EM.
QNB pointed out that many large EM economies enter the current growth phase with relatively sound macro fundamentals, credible policy frameworks, and positive real interest rates, which help anchor investor confidence. The bank also noted that foreign exchange and interest r
ate dynamics remain broadly supportive for EM assets, with the USD remaining overvalued and monetary policy in advanced economies set to become more accommodative.
The bank explained that global portfolios have become highly concentrated in US assets over the past decade, creating asymmetric risks and opportunities. Even small changes in global asset allocation could result in significant capital flows towards under-allocated asset classes, such as EM. This rebalancing does not require a negative view on US assets but rather a normalization of portfolio weights after an extended period of US dominance.
In conclusion, QNB stated that while volatility and selectivity will remain defining features of EM investing, the macro environment entering 2026 continues to look supportive for the asset class. The global investment cycle, favorable FX and interest rate dynamics, and structural portfolio rebalancing all point towards sustained capital inflows into EM. EM assets are expected to remain well-positioned for an
other year of solid performance and potential outperformance relative to advanced markets.