Emerging Markets

Emerging market bonds have remained generally resilient despite a sustained oil shock, elevated geopolitical uncertainty, and tighter global financial conditions. Stronger policy frameworks, improved external balances, and healthier macroeconomic fundamentals have helped support performance this year.

We believe that the outcome of Brazil’s October election will likely be a contributing driver of Brazilian asset performance heading into year-end, shaping market expectations for fiscal policy, institutional stability, and the medium-term outlook for growth and inflation.

We believe emerging markets (EM) are reasserting themselves as a compelling source of long-term growth. This article explores the structural forces driving the resurgence, why quality investing has historically outperformed in EM, and why a forward-looking, active approach is essential for identifying tomorrow’s enduring compounders.

EM fixed income stayed resilient through the war-induced shock. As oil prices fell, inflation remained contained. Capital inflows resumed after a brief interruption and sovereign rating upgrades continued. We believe the asset class is supported by elevated global risk appetite, attractive local-currency yields, and diversification away from US assets.

Emerging markets have been taking up a bigger share of investors’ attention. But why? Watch these videos to take a look at the bigger picture.

Vontobel’s experts highlight a widening set of opportunities in emerging market equities, spanning consumer-driven growth, industrial capital expenditure, energy investment, and markets undergoing structural reforms that emphasize shareholder value and capital discipline.

Emerging markets have just weathered two major global shocks — and have come out on top. We believe this is no accident. Many investors missed the post-Liberation Day rebound by staying anchored in a framework that may no longer describe the emerging-market universe. The same misreading risks compounding potential portfolio under-exposure today.

We believe EM fixed income is better positioned today than four years ago, despite uncertainty around the duration of the war and the disruption of oil supply. If de-escalation materializes in the short term, EM bonds may rebound amid a resumption of pre-war trends, including diversification away from US-centric portfolios.

Korea’s governance reforms tackle the 'Korea discount' by enhancing transparency and minority shareholder rights. Measures like mandatory treasury share cancellations and stronger board independence aim to unlock corporate value and drive fairer valuations. A pivotal step toward more equitable markets.

Emerging market equities enjoyed an impressive year but have investors missed the boat? We don’t think so. In fact, we believe 2025 marked the first year of positive change for at least two key structural factors, which could spark the beginning of a new positive cycle for EM equities.

2026 began with the global acknowledgement that the TACO mantra (Trump Always Chickens Out) does not apply to foreign policy. We believe this sends a clear message to leaders of small and medium-sized countries opposing or refusing to cooperate/negotiate with the Trump administration.

You can now watch the replay of our webinar: Charting the Path for Fixed Income in 2026.