Emerging markets: Broadening gains persist in 2026 – HSBC

💡 DMK Insight

Emerging Markets are set to shine in 2026, especially as the USD weakens. HSBC’s take highlights a critical shift in global economic dynamics. As the US Dollar loses strength, capital flows could pivot towards EM assets, which traditionally benefit from a weaker dollar. This trend could lead to increased investment in local currencies and equities, particularly in regions like Asia and Latin America. Traders should keep an eye on how this affects commodity prices, as many EMs are commodity exporters. But here’s the flip side: while the macroeconomic backdrop looks favorable, geopolitical tensions and local policy risks could still derail growth. It’s essential to monitor specific EM indicators, such as inflation rates and central bank policies, which could impact currency stability. For now, watch for key levels in EM currency pairs against the USD, particularly if the dollar index shows further weakness. A sustained drop in the dollar could trigger a bullish sentiment in EM assets, making them attractive for both swing and day traders looking for diversification beyond US tech stocks.