Emerging markets (EMs) may be entering a more durable period of outperformance, according to Andrew Ness, who argues that structural shifts in the global economy are tilting the balance away from developed markets.
In his op-ed, Ness points to weakening confidence in major economies—especially the United States—as a key driver of renewed investor interest. He highlights concerns about “fiscal dominance,” where government borrowing pressures begin to constrain central bank independence, undermining trust in developed-market policy frameworks.
Ness suggests this shift is already influencing capital flows, with investors reallocating toward regions offering stronger growth prospects and more attractive valuations. Emerging markets, he argues, combine “higher GDP growth, younger demographics, [and] fiscal discipline,” making them increasingly compelling relative to developed peers.
A major pillar of his argument is currency valuation. Ness notes that “EM currencies look cheap on a real effective exchange rate basis,” indicating potential upside as global imbalances adjust.
He also emphasizes a valuation gap between U.S. equities and international markets, suggesting that emerging markets could benefit as investors reassess risk and return. His investment approach reflects this view: rather than tracking benchmarks, his team seeks undervalued companies with strong growth potential, “regardless of index inclusion.”
Despite the optimism, Ness acknowledges lingering risks, including governance concerns in some markets and heavy concentration in parts of Asia. Still, he argues that improving corporate standards and earnings growth prospects are strengthening the case for EM equities.
Ultimately, Ness frames the current moment as potentially different from past false starts. With structural pressures mounting in developed economies and valuations diverging sharply, he concludes there is “a decent chance this year’s rally will continue.”
