MarketMoodz
JPMorgan Shifts Bets to EM and Europe, Prefers International Equities
JPMorgan equity strategists say they remain long emerging markets and favor international equities over U.S. stocks, signaling a meaningful regional tilt. They cite EM’s 2025 outperformance, robust inflows, and cheaper valuations as the backbone of the view, though several data points require independent verification.
Key Takeaways
- EM and international equities are favored over U.S. stocks
- EM outperformed DM in 2025 by about 10% in dollar terms (MSCI-based)
- EM equity inflows totaled $29.2B in 2025, with YTD inflows of $55.5B
- EM forward P/E ~13x, roughly 33% cheaper than the U.S.
- JPMorgan sees continued outperformance for Japan and Europe relative to the U.S.
People Involved
- JPMorgan Equity Strategists Group of JPMorgan Chase & Co. equity strategists cited in the note
- Sanae Takaichi Japanese politician (noted for speculative expansionary policies in the claim)
Entities Involved
- JPMorgan Chase & Co. Global financial services firm issuing the regional view
- MSCI Inc. Index provider used for EM performance and valuation references
- Stoxx Ltd. Index provider for STOXX Europe 600 and sector indices
- Nikkei 225 Japanese stock index mentioned as a YTD mover
MarketMoodz Analysis
The note signals a potential rebalancing opportunity for U.S.-based and global investors, with more capital flowing toward EM and European equities. If EMs benefit from lower policy rates, currency support, and improving growth, portfolio construction may tilt toward international exposures to capture faster growth at cheaper valuations.
From a historical standpoint, EM has often led cycles when monetary conditions ease and risk appetite improves. The 2025 performance data — EM indices outperforming DM by roughly 10% in dollar terms — aligns with a broader regime where cyclicals and financials in Europe and strong growth pockets in Asia drive gains, even as FX and policy risk remain. The sector breadth of Europe in 2025 — banks and aerospace/defense leading gains — provides a blueprint for where leadership could come from if the region compounds earnings and reduces uncertainty in 2026.
Investors should watch for two key developments next: (1) the EM policy backdrop and USD trajectory, which can swing relative returns; and (2) the earnings trajectory for Europe and Japan in 2026, where cheaper valuations and potential operating leverage could unlock upside if global growth holds.
Source: Original Article
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