Is this the best comeback trade no one is talking about?

Emerging markets have spent much of the past decade on the wrong side of investor attention. Despite steady economic growth and improving corporate fundamentals – particularly across large parts of Asia - capital consistently flowed elsewhere, toward the US, its technology champions, and the perceived safety of developed markets. For emerging market investors, strong company performance was repeatedly overwhelmed by a rising US dollar, valuation compression, and persistent scepticism. That backdrop is now shifting. After years of underperformance, emerging markets delivered a strong rebound over the past 12 months, prompting renewed interest from investors willing to look beyond familiar narratives. For Dr Joseph Lai, who has covered Asian and emerging markets for more than two decades at Ox Capital Management, the change is not random. It reflects a confluence of forces that have quietly turned from headwinds into tailwinds, most notably the direction of the US dollar. Lai argues that currency dynamics sit at the heart of the emerging market opportunity set. A strong US dollar made it difficult for returns to compound, even when local earnings were growing. As that pressure eases, long ignored fundamentals are beginning to reassert themselves, particularly in parts of Asia where valuations remain attractive and balance sheets are comparatively healthy. As Lai explains: “Once that reverses, emerging markets can become very interesting because the good companies are growing and these economies are typically growing at double the real GDP growth rates of developed markets. You have growth, a stable or appreciating currency, and in many cases dividend yield, all from valuation levels that are very cheap after years of underperformance.” In this conversation, Lai outlines why he believes the recent turnaround may mark the early stages of a longer cycle, how geopolitics and fiscal policy are reshaping capital flows, and why countries such as Indonesia and Vietnam are reaching important inflection points. He also discusses where OxCap is leaning in today and where caution is still warranted as emerging markets re-enter the investment conversation. TIME CODES 00:03 – Introduction: Why emerging markets are stirring again 00:26 – The big themes for 2026: currencies, geopolitics, and AI 03:00 – Emerging markets outlook: Why the cycle may be turning 04:30 – Hidden EM opportunities and why investors miss them 05:51 – Indonesia and Vietnam: Parallels with China’s early growth years 09:56 – Key risks to the EM thesis in 2026 12:04 – Balance sheets and resilience: EM versus the developed world 13:53 – Portfolio positioning: Where Joe is investing today 16:41 – High-conviction ideas: Indonesian banks and Asian memory stocks 18:12 – Final message for investors considering EM in 2026 and beyond