Market Update: October 27, 2025
Emerging markets are not what they used to be. Once defined by commodities, energy, and manufacturing, EM is now powered by technology. This year, EM equities have gained 31.7%, nearly doubling the S&P 500’s 16.7% advance, thanks in part to AI-linked growth in Taiwan and South Korea, and potentially soon China, as trade discussions progress.
Weekly Market Brief
Global equities advanced again last week, led by the U.S. and emerging markets. Technology, energy, and industrials outperformed, while defensive sectors lagged. Bonds posted modest gains, aided by a softer inflation print and optimism around continued Fed easing.
Internationally, EM led on strength from Taiwan and South Korea, both tied closely to global AI and semiconductor growth. China and Brazil also contributed as trade sentiment improved. A stronger dollar limited returns for developed markets.
Theme of the Week: EM is Not Your Old EM
Emerging markets have evolved from the BRIC-era mix of oil, metals, and low-cost manufacturing. Today, they are central to the AI supply chain, designing chips, building data centers, and producing the components that power machine learning and cloud computing. This new composition has improved fundamentals, diversified risk, and created a meaningful source of structural growth beyond the U.S. mega caps.
Notes from the Optimizer
Our models show that much of the portfolio’s fundamental growth exposure now originates from EM, with declining correlations to traditional cyclicals. This evolution supports the case for sustained allocation. Emerging markets are not just a beta play on global growth; they are the growth engine of AI.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.