EM Special Publication: A resilient first half

Research evidence excerpt

EM Special Publication: A resilient first half

Deutsche Bank

Research

Emerging Markets Date

EM Special Publication 1 July 2026

A resilient first half

Sameer Goel

We are unapologetic cheerleaders for EM – both because of its ability to adapt Macro Strategist

and learn from crises, and because of the differentiation (and RV opportunities) it +65-642-36973

offers. The first half of 2026, dominated by two themes - the energy price shock

(and its delta on monetary/fiscal policy calculations) and tech cycle gyrations – Bryant Xu

Strategist bears us out on both these characteristics of EM. +65-6423-5558

▪ EM equities have been the best performing major macro asset class, in

Jalaj Singh

both absolute and risk adjusted terms. This has in fact been the best Research Associate

performance for EM equities in the first half of any year since GFC. This

is not as narrow an outperformance as commonly perceived (14/22

markets are up YTD), though with significant outliers – Asia bookending

with up 60%+ in Korea to down 40%+ in Indonesia.

▪ EMFX has been more resilient to the support dollar has found in recent

months, compared with G6 FX, with the difference (starker) in total

returns terms (Figure 1). This talks to; a) the cyclical nature of the asset

class (and that growth has held up relatively well in EM); b) policy

prudence; and c) better real rates/commodity buffers.

▪ EM local currency returns have been almost flat YTD, with the local

(blended) yield spread only small wider vs USTs in the first six months of

the year. This again masks a significant regional variation, with LatAm

and CEEMEA significantly outperforming Asia. Our estimates suggest

that EM dedicated investors are running record high levels of

overweights (against benchmark in LatAM and CEEMEA versus