MSCI Emerging Markets: A Strategic Moment for Investors
The MSCI Emerging Markets Index has reached 1,593.53 on 23 February 2026, comfortably above its 52‑week high of 1,591.64, while still more than 60 % higher than the low of 982.57 recorded in April 2025. The index’s performance reflects a confluence of structural drivers that are reshaping the investment landscape across the region.
AI‑Driven Earnings Surges
According to a report by MS, the rise in artificial‑intelligence (AI) capital expenditure is propelling the strongest earnings growth in emerging‑market stocks since the 2002‑2004 super‑cycle. Companies in China, India and Southeast Asia are channeling unprecedented amounts of funding into AI platforms, cloud infrastructure and semiconductor development, which translates directly into higher revenue and profit multiples. This trend is expected to sustain the bullish bias for the rest of the year and into 2027.
Asset‑Management Activity Highlights Demand
The most recent ETF filings underscore the appetite for exposure to these markets:
| Product | Net Asset Value | Currency | Distribution/Accrual |
|---|---|---|---|
| Amundi Core MSCI Emerging Markets UCITS ETF EUR Dist | – | EUR | Distribution |
| Amundi MSCI Emerging Markets Swap UCITS ETF USD Acc | – | USD | Accumulation |
Both funds, managed by Amundi, have increased holdings in the MSCI EM index since the start of the year, signalling confidence in the sector’s trajectory. The swap‑based structure of the USD Acc product offers a lower cost of entry for investors seeking higher leverage on the underlying equity exposure.
Geographic Shifts in Weighting
A shift in investor flows has nudged India’s weight in the index down to fourth place from second, as reported by MoneyControl. The decline is attributed to a redistribution of capital toward AI and semiconductor sectors in other regions, notably China and the Philippines. This realignment suggests that investors are seeking higher‑growth niches rather than merely large‑cap representation.
Conversely, the BlackRock Latin American Investment Trust and the BlackRock Frontiers Investment Trust have both released portfolio updates that highlight a continued focus on high‑growth segments of Latin America, including technology and green‑energy infrastructure. The trust’s updates indicate a strategic tilt toward countries that are benefiting from the global push toward sustainable development.
Macro‑Environment and Policy Signals
Recent political developments, such as the easing of capital controls in Argentina, have created a more favorable environment for international investment. As reported by Cronista, the removal of restrictive measures could unlock significant inflows into Argentine equities, thereby adding a new source of upside for the MSCI EM index.
In addition, Citi’s latest research confirms that world‑class asset managers—controlling more than $20 trillion in assets—are adding to their EM exposure. The sentiment is that emerging markets are becoming one of the year’s most compelling trades, driven by both fundamental growth prospects and improved risk‑adjusted returns.
Forward‑Looking Outlook
- Earnings Momentum – AI‑related capital spend is expected to maintain earnings momentum through 2027, supporting higher valuation multiples.
- Sector Rotation – Investors are moving capital into technology‑heavy economies within the index, reducing exposure to traditional commodity‑driven markets.
- Risk‑Adjusted Returns – Despite volatility, the MSCI EM has delivered a 52‑week high that suggests a robust risk‑return profile relative to developed‑market peers.
- Policy Liberalisation – Easing of capital controls in key economies could unlock new inflows and broaden the index’s diversification benefits.
In sum, the MSCI Emerging Markets Index sits at a pivotal juncture: the combination of AI‑driven earnings growth, strategic asset‑management inflows, and evolving geopolitical dynamics creates a compelling narrative for investors seeking higher‑growth exposure outside the developed‑markets arena.
