ChainThink reports that, in a July 19 report, Citigroup stated that the MSCI Emerging Markets Index has risen approximately 20% year-to-date. The bank maintains a neutral global allocation rating for emerging market equities but expects an additional 12% upside potential, with a target of 1,870 points by end-2026 and 2,050 points by mid-2027.
The report states that emerging markets are expected to see a 63% profit growth in 2026, slowing to 24% in 2027; since the end of February, the 2026 profit forecast has been raised by 28 percentage points, with the information technology sector accounting for approximately 85% of this increase.
Citibank stated that this year's gains have remained concentrated in South Korea, Taiwan, and the technology sector; the key question for the second half of the year is whether the rally can expand to more countries and industries.
Regionally, Citibank has upgraded its rating for China from neutral to overweight, citing low market positioning and undemanding valuations; if lower oil prices, improved global growth, and incremental policy support occur simultaneously, Chinese equities could benefit.
The China strategist expects the Hang Seng Index to reach a target of 29,600 points by the end of 2026 and 30,500 points by mid-2027. Citigroup has also downgraded Korea from overweight to neutral, citing increased market volatility, elevated positioning, and retail leverage products amplifying fluctuations.
Taiwan remains overweight. In terms of valuation, the MSCI Emerging Markets Index has a 12-month forward P/E ratio of approximately 11.5x; South Korea and Brazil are relatively cheaper, while Taiwan and India are more expensive.