March 2026 – The U.S. dollar’s weakness since the start of President Donald Trump’s second term has created winners and losers. Losers include many European countries, because the euro’s appreciation versus the dollar has made exports to the United States more expensive. European products now cost more in the U.S. The trade tariffs imposed by Trump on imports have amplified this effect. Twenty of the 27 EU member states recorded declining exports to the U.S. last year, while imports from the U.S. to Europe increased, roughly by five percent.
Low dollar exchange rate improves the situation for emerging markets
Winners from the dollar depreciation include, besides U.S. firms that can now sell their goods cheaper in other markets, many emerging‑market economies. This has little to do with trade flows and more with the fact that a low dollar exchange rate improves the overall financing environment for emerging markets. When they – or companies from those markets – are dollar‑denominated indebted, a weak greenback reduces both debt and interest burdens.
A low dollar also attracts investors to emerging markets. They are looking for attractive investment opportunities outside the dollar‑centric sphere, and they find them in these economies. The “fresh” capital opens new financing and business opportunities for emerging‑market firms. Consequently, analysts have recently raised their expectations for earnings growth of companies from emerging markets substantially – by about 16 % on average over the past few months.
The border between emerging markets and developed nations is blurring
Nevertheless, the cheap dollar alone cannot fully explain the profit surge. Another, equally important factor is innovation. In particular, technology‑focused companies from emerging markets are scoring increasingly well. Patent applications by Chinese firms have quadrupled over the past ten years and now amount to roughly 1.6 million filings – the highest number worldwide.
Measured by innovative capacity, countries such as China are no longer just “emerging” economies. In Shanghai, for example, “robotaxis” from Pony.ai already operate and will soon shape the streets, whereas driverless taxis are still rare in many Western cities. Some providers have announced pilots of robotaxis on Swiss roads for 2026, but these are initially limited to rural areas.
China has long evolved from a “workbench” for U.S. and European firms into an innovative economy, even though the “workbench” role still exists. Its innovative developments increasingly make China an independent player in the global economy, calling into question the line between emerging markets and industrialized nations. China is currently “somehow” both an emerging market and a developed economy – a situation that may also apply to countries such as India and Brazil.
Emerging‑market stocks have risen sharply
Analysts’ upbeat earnings forecasts for emerging‑market companies are reflected in rising share prices. Over the past twelve months, the MSCI Emerging Markets Index has gained more than 30 %, whereas the MSCI World Index has risen by only about 16 % (as of 25 March 2026). The MSCI Emerging Markets Index includes large companies from emerging economies; Chinese firms carry the highest weight at 27 %, followed by companies from Taiwan (21 %) and South Korea (16 %).
The following links lead you to an overview of the products we currently offer on the Hang Seng Index and the Hang Seng China Enterprises Index, respectively.