The de-globalization movement is the latest trend pushing emerging markets to increase collaboration with one another, says Indrani De, head of global investment research at FTSE Russell.
After U.S. President Donald Trump announced global tariffs in April 2025, uncertainty around global trade began to increase and analysts expected emerging markets would be severely impacted, she notes. However, a report by FTSE Russell found emerging markets have reached about 41 per cent of the global gross domestic product and could even reach 45 per cent by the end of the decade.
“The reason for that is the changes that have been happening, both within emerging markets and in the global trading order — emerging markets are trading more with each other.”
De notes the U.S. and Japan are the only developed countries providing revenue to companies in the FTSE Russell emerging markets index and only accounted for about 16 per cent of revenues. “That is really one of the strengths of the emerging markets countries. . . . They are more dependent on each other for their growth.”
While emerging markets have been increasingly relying on one another for nearly a decade, the impact of U.S. tariff policy, accompanied with the positive results seen last year, demonstrate why this change has been significant, she adds.
Equities in this space are likely to benefit from more cyclical factors, such as having larger fiscal head room, a more independent monetary easing cycle, attractive valuations, better earnings growth outlooks and lower correlations relative to developed markets.
Read: Emerging markets regions building resiliency amid geopolitical shifts, tariff woes