GEMs in the week What’s cheap going into Q3? The tables have turned

Research evidence excerpt

GEMs in the week What’s cheap going into Q3? The tables have turned

3 July 2026

GEMs in the week Multi-AssetEmerging Markets

What’s cheap going into Q3? The tables have turned

◆ A volatile Q2 still delivered decent EM returns, led by EM

Ali Cakiroglu

equities and EXD, broadly in line with our expectations… Emerging Markets Strategist

HSBC Bank plc

◆ …but our updated fundamental valuation model now shows alicakiroglu@hsbc.com +44 20 7991 0547

EM LCD is trading at a discount, while equities and EXD Edward Parker, CFA

screen at a premium Emerging Markets Strategist HSBC Bank plc

edward.parker@hsbc.com

◆ Light positioning and easing inflation pressures could +44 20 3359 7563

improve the summer return outlook for EM LCD Ramya R S

Emerging Markets Strategist

HSBC Bank Middle East Limited, DIFC

EM valuations going into Q3: the multi-asset view ramya.r.s@hsbc.com + 971 4 509 3351

Nobody expected the shock from the Middle East conflict to linger forever, but few

Rohit Mehboobani*

would have anticipated how quickly the market narrative would change heading into Associate

the summer. The easing of geopolitical uncertainty and the sharp decline in oil prices Bangalore

have redirected market attention to the resilient nominal activity in the US, a more

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

hawkish Fed, and a stronger US dollar (HSBC Global Macro Strategist: Shifting not registered/ qualified pursuant to FINRA regulations

narratives, 25 June 2026).

Given the shifting market narratives, we thought it would be a useful time to revisit

valuations across EM assets, using our fundamental valuation model. As a reminder,

our framework compares actual asset returns with those implied by the prevailing