Emerging-market assets, including stocks, commodities, currencies, and precious metals, are extending their strong performance in early 2026. Rising tensions between the United States and Europe are weighing on the US dollar and revitalising the “sell America” investment strategy. This shift has spurred increased investment in emerging markets, driving significant gains across various asset classes.
The rally in emerging markets gained momentum following the US announcement of a framework agreement with NATO allies regarding Greenland. Emerging Asian shares rose 0.5 per cent, on track for a record close as South Korean and Hong Kong tech shares rallied. China’s central bank set the yuan’s daily reference rate stronger than the 7-per-dollar level for the first time in more than two years, boosting Asian currencies.
Investors are allocating capital to emerging-market funds at an unprecedented rate, accelerating a rotation away from US holdings. This influx has propelled a broad gauge of EM stocks to record highs, with the MSCI EM Latin American Index reaching its highest level since April 2018. Some local currency government bonds have also reached new peak values. The tensions have revived questions about US exceptionalism and the role of the dollar, spurring funds to diversify away from Treasuries.
Currencies like the Brazilian real, and the Colombian and Chilean pesos, have appreciated by more than 3 per cent this year. Simultaneously, gold prices have surged to record levels, nearing $US5000 an ounce. The National Bank of Poland, identified as the world’s largest reported gold buyer, recently approved plans to acquire an additional 150 tonnes of the precious metal.
