Emerging Markets Equity Strategy: June & 2Q 2026 Wrap – Fed turn, geopolitical resolution, and AI dispersion

Research evidence excerpt

Emerging Markets Equity Strategy: June & 2Q 2026 Wrap – Fed turn, geopolitical resolution, and AI dispersion

Global Equity Research

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GEMS First To Market 03 July 2026

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Emerging Markets Equity Strategy (Rajiv Batra/Emy Shayo Cherman/Anindita Gandhi), Brazil, Chile, China,

Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Kuwait, Malaysia, Mexico, Peru,

Philippines, Poland, Qatar, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab

Emirates

June & 2Q 2026 Wrap – Fed turn, geopolitical resolution, and AI dispersion

MSCI EM posted a monthly decline in June (-1.7%) even as the quarter ended up +23.3%, the best since 2Q2009. In

June, both MSCI EM and S&P500 (-1.1%) continued to refresh all-time highs led by the AI/Tech trade, but volatility was also

heightened due to concerns over valuation of tech heavyweights, dragging index performance to negative for the month.

Korean equities also saw heightened volatility resulting from large outstanding leveraged ETFs. On geopolitics, an MoU

between Iran and the US extended the ceasefire for 60 days and provided for the reopening of the Strait of Hormuz. Though

the terms of a final deal are still being worked out, the truce has removed the most acute tail risk to the global economy

regarding energy supply disruptions. Implementation risks, miscalculation, and potential re-escalations remain key tail risks but

shipping has gradually picked up through the SoH despite sporadic clashes.