Institutional Perspectives on Emerging Markets

A transition of enterprise IT budgets from planning and experimenting with AI tools to deploying large-scale programs.

Transition from AI experimentation to large-scale enterprise software deployment.

Easing of geopolitical tensions (specifically progress in U.S. and Iran negotiations), which helped stabilize oil and energy markets.

Easing of geopolitical tensions surrounding the Middle East conflict, restoring investor confidence.

A record wave of high-profile initial public offerings (IPOs) could reach over $200B in public equity issuance, driven by mega-cap listings.

A powerful AI-driven earnings cycle that led investors to look through inflation and geopolitical concerns to boost global equity markets.

Resolution of the durability of the US-Iran ceasefire.

Easing of geopolitical tensions in the Middle East and recovery of shipping activity in key maritime chokepoints like the Strait of Hormuz.

Successful US-Iran peace talks reducing inflation expectations and unlocking private investments.

A trend reversal where speculative tech froth cools down, prompting a market-wide rotation back into old-fashioned value stocks.

Potential reopening of the Strait of Hormuz which would normalize global LNG and crude shipping flows.

A potential long-overdue sea change in equity market leadership favoring smaller and medium-capitalization non-US value equities over mega-cap US growth.

US and Israeli coordinated military strikes against Iran's leadership in late February.

Future Federal Reserve interest rate cuts, which would reduce bank loan yields and support duration-heavy high-yield portfolios.

A nascent ceasefire in the Iran conflict expected to benefit emerging market equities.

Geopolitical risk in the Middle East causing supply concerns for crude oil.

A highly positive and supportive regulatory environment in the US, including a new pro-crypto SEC chair and the anticipated passage of a bipartisan stablecoin bill.

A potential shift in market focus back to valuations, closing the record valuation spread between disciplined value strategies and expensive benchmarks.

Implementation of pro-growth economic policies and deregulation by the incoming U.S. administration.

Broadening AI implementation allowing companies to utilize AI to create real-world efficiencies.

Global central bank interest rate cuts providing monetary tailwinds for emerging market currencies and growth assets

Ebbing inflation paired with resilient consumer spending and robust employment.

Generative AI Integration: Adoption of LLMs and generative AI tools represents a massive wave of secular growth that can dramatically improve corporate productivity and yield high-value new premium software features.