Mali Chivakul, emerging markets economist and strategist at Bank J. Safra Sarasin, sees a bifurcation emerging. “While the structural trend of a weaker US dollar remains intact, the pace of the US dollar depreciation in 2H2025 should be much slower than in 1H2025,” she says.
Emerging market (EM) equities, which outperformed developed market (DM) peers in the first half of 2025, face a more nuanced environment in the second half. With the US dollar’s sharp depreciation tapering off, market direction will increasingly hinge on domestic fundamentals, says Bank J. Safra Sarasin.
The MSCI EM Index rose 14% in the first six months of the year, ahead of the MSCI World’s 8% gain. Central and Eastern Europe led the EM rally, followed by Latin America and North Asia. But a slower pace of US dollar weakening is likely to shift investor focus onto structural drivers such as monetary policy, valuation, reform momentum and external trade dynamics.
