UBS On-Air: Market Moves Top of the Morning: Emerging Markets - Performance drivers and risks
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Mar 4, 2026 Alejo Czerwonko, CIO for Emerging Markets Americas at UBS CIO, offers rapid-fire perspectives on emerging markets. He explores why recent EM gains might last. He highlights external tailwinds like commodities and easy financial conditions. He flags risks such as policy shifts, U.S. monetary surprises, and concentration in sectors.
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Decade Long EM Underperformance May Be Over
- Emerging market underperformance of the past decade appears to be ending as EM stocks returned 35% in 2025 versus the S&P 500's 15% for that year.
- Alejo Czerwonko points to an 18% year-to-date EM gain versus 2% for the S&P and calls this a sign of renewed global investor interest and broader participation beyond a few megacaps.
Great Broadening Replaces Hyperconcentration
- The 'great broadening of performance' means returns should spread beyond AI hyperscalers and chip firms into more countries and sectors.
- Czerwonko cites a healthy global economy, AI-driven productivity gains, and geopolitics urging diversified geographic exposure as the drivers enabling broader EM participation.
Soft Dollar Environment Is An EM Tailwind
- External conditions matter more than internal EM dynamics; current mix is a soft dollar, easy financial conditions, and strong commodity prices which typically favor EM equities and bonds.
- Czerwonko emphasizes that many leading producers of food, energy, critical minerals and precious metals are in emerging markets, amplifying the tailwind.