3 minutes to read by  RBC Emerging Markets Equity team Jan 13, 2026

We are pleased to share with you our RBC Emerging Markets Equity Outlook for 2026.

2025 has been a notable year for global markets, marked by a leadership reversal away from the U.S. to international equity and currency markets. In particular, emerging markets (“EM”) equities have performed well, and in this year’s report we explore the potential for this trend to continue. We review the factors that drove EM’s underperformance relative to the U.S. over the previous cycle and explore the potential for a new long-term cycle led by EM.

We cover a range of topics, including macroeconomics, geopolitics, valuations, earnings, styles, sectors, and themes, and address the questions that have been top of mind for our clients. Over the years, we have found that focusing on the extremes makes sense in terms of top-down factors, as it can often be a powerful indicator of future performance and can help us mitigate cyclical risks.

We also review developments within our five portfolio themes. These themes help up position our portfolio in areas of long-term structural growth, which we feel is particularly important in an environment of heightened geopolitical and trade uncertainty. Importantly, our detailed research helps us identify the most attractive ways to play each theme from an investment standpoint, and we report on the changes we have made over the course of this year.

We deep dive on key markets across our asset class, including China, India, Southeast Asia, and Latin America, where we are seeing diverse opportunities. We continue to view India as one of the most compelling long-term stories in EM. The country offers superior growth prospects given its attractive demographics, and low urbanization and penetration rates across many areas, while from a bottom-up perspective the quality of corporates in the country really stands out. Valuations for the Indian market are less extreme than a year ago, after this year’s under-performance, and we would potentially look to add to our current neutral exposure as earnings and returns recover, following a period of cyclical weakness.

We also identify attractive opportunities across other Asian as well as Middle Eastern economies, driven by accelerating government reforms and improving shareholder returns. Meanwhile, after a challenging political environment, the outlook for Latin America is improving given upcoming elections, high real rates, positive sensitivity to a weaker USD, and attractive equity valuations.

We also review sectors and styles, and highlight where we identify opportunities and extremes. In particular, we see Quality stocks and sectors as looking attractive.

For the full report, please contact: institutions@phn.com.

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