Emerging Markets Remain Attractive Despite Middle East Conflict Risks
Despite the escalating war in the Middle East causing a surge in oil prices and renewed volatility in global financial markets, portfolio managers maintain a positive outlook on emerging markets. The asset class had previously outperformed developed markets in 2025, marking its strongest performance since 2017, with the MSCI Emerging Markets index rising by 34%. However, the recent geopolitical tensions have shifted momentum back toward developed markets as investors seek safer havens. Nevertheless, experts argue that improving fundamental economic conditions in emerging economies support continued growth potential. The conflict has pressured these markets just as they were gaining significant traction. While short-term sentiment favors safety in developed nations, the underlying fundamentals suggest that emerging markets can sustain their upward trajectory once initial shockwaves subside. This analysis highlights the tension between immediate geopolitical risks and long-term economic indicators, suggesting that strategic investors may still find value in emerging assets despite current market turbulence and the temporary reversal of investment flows toward more stable, developed economies.
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Emerging Markets Remain Attractive Despite Middle East Conflict Risks
Despite the escalating war in the Middle East causing a surge in oil prices and renewed volatility in global financial markets, portfolio managers maintain a positive outlook on emerging markets. The asset class had previously outperformed developed markets in 2025, marking its strongest performance since 2017, with the MSCI Emerging Markets index rising by 34%. However, the recent geopolitical tensions have shifted momentum back toward developed markets as investors seek safer havens. Nevertheless, experts argue that improving fundamental economic conditions in emerging economies support continued growth potential. The conflict has pressured these markets just as they were gaining significant traction. While short-term sentiment favors safety in developed nations, the underlying fundamentals suggest that emerging markets can sustain their upward trajectory once initial shockwaves subside. This analysis highlights the tension between immediate geopolitical risks and long-term economic indicators, suggesting that strategic investors may still find value in emerging assets despite current market turbulence and the temporary reversal of investment flows toward more stable, developed economies.
WSJ.com: Markets