Global asset markets have delivered a strong performance in 2025, despite bouts of volatility that periodically unsettled investors. Momentum has carried into the fourth quarter, as uncertainty around US tariff policies that weighed on markets earlier in the year continued to ease.
Instead, investor attention has increasingly shifted to the rapid expansion of artificial intelligence, which has become a defining theme for global markets. Equity returns broadened during the quarter, with developed markets outside the US and emerging economies posting solid gains. Value stocks also outperformed growth, reflecting a rotation in investor preferences.
Emerging markets have been among the standout performers this year, though leadership within the group has shifted in recent months. India, which lagged several Asian peers earlier in 2025, staged a notable recovery in the fourth quarter, outperforming China. China, meanwhile, has still delivered strong gains overall this year. The evolving rivalry for performance leadership between Asia’s two largest economies is likely to remain a key theme in 2026.
Beyond Asia, markets across Latin America and frontier economies are also on track to end both the quarter and the year as strong global performers.
In other asset classes, emerging market local currency bonds benefited from high real yields, improving fundamentals and a weaker US dollar. Gold remained one of the year’s best-performing assets. By contrast, oil prices continued to trend lower amid supply surprises, while cryptocurrencies pulled back sharply, raising concerns for retail investors who had been enthusiastic buyers earlier in the year.
Looking ahead, analysts caution that the drivers of market performance may shift in 2026. While 2025 was fuelled by improving sentiment and asset re-pricing, future gains are expected to depend more heavily on earnings growth.
Key risks include the resilience of the US economy amid a cooling labour market, concerns over potential overheating linked to AI investment, and uncertainty around emerging markets should the US dollar strengthen. However, supporters argue that stronger policy frameworks and expanding technology investment across Asia could provide a more stable foundation for growth in the year ahead.
