# Emerging Markets Shine in 2026, Driven by Asia's AI Ambitions

The emerging markets have kicked off the year 2026 with a strong start, with many indices reaching their highest levels in several years. This surge is largely driven by growing optimism about Asia's increasing role in the development and deployment of artificial intelligence (AI).

A Five-Year High for Emerging Markets

According to Bloomberg data, emerging-market stocks have climbed close to a five-year high as investors become increasingly bullish on the region's prospects. The Bloomberg Emerging Markets Index (BEMI) has risen by over 10% since the start of 2026, outperforming many developed markets.

Key Drivers of the Rally

So, what is driving this surge in emerging-market stocks? There are several key factors at play:

• Growing AI Ambitions: Asia's role in AI development and deployment is becoming increasingly important. Countries such as China, India, and Japan are all investing heavily in AI research and development, with many hoping to become leaders in the field.
• Infrastructure Development: Emerging markets are also benefiting from significant investments in infrastructure development. This includes the expansion of telecommunications networks, transportation systems, and other essential services.
• Economic Growth: Many emerging markets are experiencing rapid economic growth, driven by a combination of factors including population growth, urbanization, and government investment.

A New Era for Emerging Markets?

The rally in emerging-market stocks is creating a sense of optimism among investors. For many, it represents a new era of growth and prosperity for the region.

Opportunities and Challenges

While there are certainly opportunities for growth, there are also challenges to be addressed:

• Currency Volatility: Emerging markets often experience significant currency fluctuations, which can make investing more challenging.
• Policy Uncertainty: Many emerging markets face uncertainty around policy, particularly when it comes to issues such as trade and taxation.
• Environmental Concerns: The region is also facing growing environmental concerns, including air pollution and climate change.

How This Affects Investors

So, how should investors be responding to this trend? Here are a few key takeaways:

Diversification Strategies

Investors looking to benefit from the emerging-market rally may want to consider diversification strategies that include:

• Index Funds: Index funds can provide broad exposure to emerging markets at a lower cost than actively managed funds.
• Actively Managed Funds: Actively managed funds, on the other hand, offer more flexibility and the potential for higher returns.
• Dollar-Cost Averaging: Dollar-cost averaging involves investing a fixed amount of money at regular intervals, regardless of market conditions.

Country-Specific Investing

Some emerging markets are performing better than others. Here are a few examples:

• China: China's AI ambitions and significant investments in infrastructure development have made it an attractive destination for investors.
• India: India's growing economy and favorable business environment make it an increasingly popular destination for foreign investment.
• Indonesia: Indonesia's infrastructure development and economic growth prospects make it a key player in the region.

Conclusion

The emerging markets' strong start to 2026 is driven by growing optimism about Asia's role in AI development and deployment. While there are certainly challenges to be addressed, investors should consider diversification strategies that include index funds, actively managed funds, and dollar-cost averaging. By staying informed and adapting to changing market conditions, investors can maximize their returns and navigate the opportunities and challenges of emerging markets.

Key Statistics

• Bloomberg Emerging Markets Index (BEMI) up 10% since start of 2026
• Asia's AI ambitions driving growth in emerging markets
• Infrastructure development key driver of economic growth in emerging markets