Stocks fall, dollar rises, and traders are now less hopeful about Fed rate cuts

The war has forced investors to rethink trading strategies. What has lost relevance

Chinese stocks may rise by 20% as rising inflation expectations lead to better corporate earnings, according to analysts at UBS Securities Asia. Their opinion is <a href="https://www.bloomberg.com/news/articles/2026-02-26/ubs-sees-20-upside-for-china-stocks-on-reflationary-potential">published by</a> Bloomberg.

UBS expects Chinese stocks to rise 20%. What can push the market?

Bajaj Consumer Care Limited

MTAR Technologies Limited

MRV Engenharia e Participacoes S.A.

Last year showed that small caps in emerging markets can compete with large issuers, despite a <a href="https://en.oninvest.com/article/undervalued-small-caps-where-to-make-money-in-emerging-markets">lag</a>&nbsp;that persisted through the third quarter. For 2025, the return of the Equal Weight EM Small Cap Index, put together by analyst Aldiyar Anuarbekov for Oninvest, amounted to 18.25% in dollar terms*. For comparison: the broad-market S&amp;P 500 index grew 16.65%, while the smid-cap Russell 2000 rose 11.21% last year. The 8.06% increase in the Cap Weight EM Small Cap Index, meanwhile, indicates that the gains were more evenly distributed rather than concentrated in a small number of large stocks.

Where to find outstripping returns in EM small caps in 2026

Taiwan Semiconductor Manufacturing Company Limited

Samsung Electronics Co., Ltd.

South Korean stock market has moved to the ninth place in the world in terms of capitalization, surpassing France and Germany, Bloomberg <a href="https://www.bloomberg.com/news/articles/2026-02-25/emerging-market-rally-builds-as-korea-tops-france-in-stock-ranks">writes</a>. The market was supported by another rise in shares of Asian IT companies, which also contributed to growth in other emerging markets, the agency notes.

South Korea's stock market outperforms France's - after $2.2 trillion rally

The U.S. Supreme Court's ruling that most of the import duties imposed by U.S. President Donald Trump are <a href="https://oninvest.com/article/verhovnyj-sud-ssa-otmenil-global-nye-posliny-prezidenta-trampa-rynki-rastut">illegal</a> and his response - imposing an additional global levy of 15% - is playing into the hands of emerging markets. They have been on the periphery of international investors' attention for many years, but now their indices are strongly outperforming developed markets.

Emerging market indices outperformed developed markets. Asia and Latin America attract investors 

The traditional method of compiling emerging market (EM) indices, which ties a country's weighting to its stock market capitalization, results in the quality of government and political regime not being taken into account, says Perth Toll, founder and CEO of Life + Liberty Indexes. In practice, she says, it turns out that huge investments are directed to countries with authoritarian governance.

How not to invest in autocracy: a guide to working in emerging markets 

Eli Lilly and Company

Novo Nordisk A/S

Dr. Reddy's Laboratories Limited

Sandoz Group AG

Hims & Hers Health, Inc.

The United Laboratories International Holdings Limited

Huadong Medicine Co., Ltd

DexCom, Inc.

Abbott Laboratories

Lupin Limited

The market for weight loss drugs that <a href="https://oninvest.com/article/vse-o-nikh-govoriat-kak-novye-preparaty-izmeniat-nashu-zhizn">revolutionized</a> pharmacoculture in the early 2020s is entering a new phase. This year, Novo Nordisk's patents for semaglutide, the active ingredient in Ozempic, perhaps the most famous drug in this class, will expire in five major countries. This means that generic manufacturers will enter the race, new numerous players who are already preparing to make money by flooding the world with inexpensive analogs.

Substance-for-money exchange: $32 billion semaglutide market enters patent collapse phase

iShares MSCI Emerging Markets ETF

SPDR S&P 500 ETF Trust

Franklin FTSE United Kingdom ETF

iShares MSCI ACWI ETF

The U.S. stock market has been put in second place by the bank

Goldman Sachs has named the best investment destination. And it's not the United States

NVIDIA Corporation

Alphabet Inc.

Carvana Co.

Meta Platforms, Inc.

CRH plc

Comfort Systems USA, Inc.

The Middle East, in Ray Dalio's estimation, is turning into a "Silicon Valley of capital", attracting talent and billions of investments in AI infrastructure. Google has announced the launch of its first AI glasses in 2026, competing with Meta in the AI-wearables segment. About these and other topics - in our review of key events by the morning of December 9.

Highlights for this morning: Middle East rushes into AI, Google creates glasses, Nvidia goes to China

Moura Dubeux Engenharia S.A.

Small-cap stocks in emerging markets continue to lag their large-cap peers. Global equity gains are being driven primarily by major tech companies, while the anticipated lift from the Fed’s rate cuts has yet to filter through to emerging-market small caps – historically, these companies, more sensitive to capital costs, react to falling funding costs with a delay.

Undervalued small caps: Where to make money in emerging markets

Banco BBVA Argentina S.A.

Grupo Financiero Galicia S.A.

Banco Macro S.A.

Investors are buying up Argentine assets after the convincing victory of President Javier Milay's party in the midterm elections, Seeking Alpha <a href="https://seekingalpha.com/news/4508498-argentina-stocks-and-us-listed-etfs-rise-sharply-as-mileis-party-wins-big-in-midterm-elections">reports</a>. The results of the vote strengthened traders' confidence that Miley will continue the course of austerity and market liberalization, and his reforms will not be blocked in Congress, Bloomberg <a href="https://finance.yahoo.com/news/argentina-investors-poised-rally-milei-021714477.html">adds</a>.

'The party's on': investors buying up Argentine assets after Milieu's party's victory

Wanting to reduce the U.S. trade deficit and U.S. dependence on foreign capital, Trump has delivered big gains for emerging markets