The Global Investor: Navigating International Markets Strategically

In an era where US equities once reigned supreme, 2025 marked a turning point as international markets surged ahead, outpacing US stocks by 17 percentage points. This shift reflects fundamental changes in global growth patterns, corporate reforms, and the diffusion of technology beyond American shores. For today’s investor, understanding these dynamics is crucial to building resilient, high-performing portfolios.

Understanding the Market Shift

The past decade was defined by over a decade of US dominance, driven largely by innovation in Silicon Valley and record-setting Federal Reserve policies. Yet in 2025, Europe, Japan, and emerging markets delivered strong earnings growth in Europe and Japan, signaling a broader rebalancing.

Policy reforms—such as enhanced corporate governance in Japan and Korea, fiscal expansion in Europe, and targeted infrastructure investment in emerging economies—have narrowed traditional growth gaps. Meanwhile, the US has grown increasingly reliant on AI, which accounted for roughly 70% of its equity returns and 40% of GDP growth in 2025. As investors reassess US “exceptionalism,” opportunities abound abroad.

2026 Macroeconomic Outlook

Looking ahead, the International Monetary Fund forecasts global growth of 3.3% in 2026, a slight upward revision. Emerging markets and developing economies are set to expand at 4.2%, outpacing developed markets at 1.6%. India leads the way at 6.7%, fueled by high-tech exports, wage gains, and robust consumption.

• Key Drivers for 2026: Easing monetary policy with anticipated rate cuts by the Fed, continued AI-led productivity and innovation acceleration, and a weakening US dollar after its multi-year rally.
• Regional Growth Dynamics: Eurozone growth of 0.9% supported by digital and defense investment; EM’s demographic dividend and domestic consumption trends driving sustained momentum.
• Risk Factors: Geopolitical tensions, lingering US tariffs on key trading partners, and potential bottlenecks in energy and data-center capacity for AI workloads.

Regional and Country Spotlights

Investors seeking targeted exposure can leverage country-specific catalysts while balancing regional diversification. Below is a snapshot of key markets:

Beyond this table, markets such as South Korea and Taiwan remain pivotal for semiconductor supply chains, while Mexico and Southeast Asia benefit from near-shoring trends. Brazil and Gulf states offer attractive cyclicals and yield plays amid improving macroprudential frameworks. A balanced constellation of emerging markets ex-China can enhance risk-adjusted returns.

Investment Strategies and Themes

Diversification is no longer a choice but an imperative. With global equities projected to return 11% over the next 12 months—driven primarily by earnings rather than valuation expansions—allocations should span geographies, sectors, and factors.

• Diversification across regions, growth and value factors ensures less correlation among holdings and smoother performance across cycles.
• Active and factor-based approaches exploit higher dispersion in EM, using momentum, value, and earnings revision signals to identify outperformers.
• Income generation strategies via EM debt, securitized assets, dividend equities, and option overlays to enhance yield in a low-rate environment.

AI’s reach extends well beyond US tech giants, seeping into manufacturing hubs and digital ecosystems across emerging markets. Investors can position in semis and infrastructure projects that support next-generation computing and renewable energy integration.

Managing Risks and Seizing Opportunities

Investing globally introduces currency, geopolitical, and regulatory risks. Yet disciplined portfolio construction—anchored by rigorous research, active risk management, and periodic rebalancing—can turn volatility into opportunity.

Key considerations include monitoring US tariff developments, tracking China’s policy shifts, and gauging the pace of monetary easing. By combining strategic allocations with tactical adjustments, investors can capture the momentum of regions poised to outgrow developed markets.

Ultimately, the path to success lies in embracing change. As growth centers shift and new technologies diffuse worldwide, the global investor who remains adaptive, informed, and forward-looking stands to reap outsized rewards.