ChainThink report: Citigroup stated in its July 19 report 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 forecasts an additional upside potential of around 12%, with a target of 1,870 points by end-2026 and 2,050 points by mid-2027.

The report notes that earnings growth for emerging markets is projected at 63% in 2026, slowing to 24% in 2027; since late February, 2026 earnings expectations have been revised upward by 28 percentage points, with the technology sector contributing roughly 85% of this revision.

Citigroup remarks that current gains remain concentrated in South Korea, Taiwan, and the tech sector, with the key question for the second half being whether momentum can broaden across more countries and industries.

In regional allocation, Citigroup upgraded China from neutral to overweight, citing underweight positioning and relatively low valuations, suggesting Chinese equities could benefit if oil prices decline, global growth improves, and policy stimulus is marginally intensified;

its China strategists forecast a target of 29,600 points for the Hang Seng Index by end-2026 and 30,500 points by mid-2027. Citigroup also downgraded South Korea from overweight to neutral, citing rising market volatility amplified by elevated positioning and retail leverage products;

Taiwan remains overweight. Valuation-wise, the MSCI Emerging Markets Index’s forward 12-month P/E ratio stands at approximately 11.5x, with South Korea and Brazil relatively cheap, while Taiwan and India appear overvalued.