29 JANUARY 2026
2025 proved to be a good year for many emerging market (EM) equities with the principal Brazilian and Chinese indices comfortably outperforming their developed market peers.
India was the notable exception with local stocks struggling the face of valuation concerns and persistent foreign investor outflows.
For all the talk of US equity dominance, it is encouraging to see the bull market broadening out and the chart below suggests the trend could persist.
The red line shows US stocks are now trading at more than 20x future earnings; not necessarily a signal for an imminent bear market, but punchy by historical standards and a warning that the best of the gains may be behind us.
Conversely, Brazilian (light blue) and Chinese (dark blue) stocks are trading at less than half of those multiples, suggesting strong absolute and relative returns may still lie ahead.
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