“The EM sentiment pendulum has swung too far positive,” Pickle said. “The global economic rebound we expect later in 2025 and the eventual resolution of many trade-related concerns will push EM prices higher but those returns will lag US markets.”
Investors should reduce their holdings of emerging market equities and buy US stocks instead, according to Wells Fargo & Co.
While shares in up-and-coming economies have outperformed the S&P 500 benchmark index this year, emerging market outperformance is typically correlated with a weak US dollar, Austin Pickle, an investment strategist, wrote a note dated May 19. He forecasted a stronger greenback while flagging the risk of China-US tensions.
