The main driver of global equity performance came from emerging markets in the year to date to 31 May 2026 as they outperformed developed economies over this time.
According to Bloomberg data, emerging markets generated a year-to-date return of 24.8 per cent, which was well above the results produced from the United States and United Kingdom.
A key feature of this trend has been strong and consistent dividend growth whereby emerging markets have delivered nearly 12 per cent compound annual dividend growth over the past two decades. To this end, more than half of emerging market companies are now offering dividend yields above 3 per cent, compared with only 40 per cent of developed market corporates.
“Structural tailwinds, including sustained capital investment, resilient fundamentals and attractive valuations, continue to underpin long-term growth prospects and provide insulation against heightened volatility,” Aberdeen Investments global emerging market equities senior investment director Matt Williams noted.
“We continue to see both fundamental and technical factors supporting the case for emerging market equities, even as the risk backdrop becomes more complex.”
Looking forward, the manager expects emerging market equities to deliver 12 per cent to 15 per cent earnings per share growth over the coming cycle. This forecast is supported by a multi-year capital expenditure supercycle and rising domestic consumption within these economies.
Central banks in emerging markets also remain in a position of strength, with positive real interest rates and solid foreign exchange reserves helping to support their currencies.
Emerging markets also remain attractive from a valuation perspective, with stocks in these regions trading at an approximate 40 per cent discount to the MSCI World index, based on forward price-to-earnings ratios.
Williams pointed out all of these factors indicate emerging markets have evolved significantly over the past couple of decades.
“Dividend growth in emerging markets has significantly outpaced that of developed markets since the early 2000s,” he confirmed.