Summary

• Middle East conflict pushed oil above $100, creating near-term pressure on oil-importing EM economies while benefiting exporters.
• Long-term conviction in AI supply chain and commodity names held firm despite geopolitical volatility and selective portfolio trimming.
• Rate-cutting cycles across EM will likely run shorter and shallower than expected as the energy shock complicates central bank decisions.

Emerging markets started off strong in 2026, but Middle East conflict and surging oil prices created new headwinds, leading to targeted portfolio changes.

Emerging markets entered 2026 with real momentum built through 2025, supported by

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