2026's Biggest Investment Opportunity Nobody's Talking About

Emerging Markets Outlook for 2026

Key Concepts: Emerging Markets, Fintech, Super App, Diversification, E-commerce, Digitization, Middle Class Growth, Supply Chain Shifts, Devaluation of US Dollar, AI Integration, Latin America, Southeast Asia, Africa, India, Middle East.

I. Macroeconomic Context & Growth Drivers

The S&P 500 experienced a strong performance in 2025, but emerging markets demonstrated even greater growth. Emerging markets, defined as less developed countries excluding the US, EU, and Japan (specifically Latin America, India, Southeast Asia, and Africa), are characterized by higher growth rates despite being inherently riskier due to less established economies. In 2025, emerging markets outpaced global GDP growth, and this trend is projected to continue into 2026.

A key driver of this growth is the expansion of the middle class in these regions, leading to increased disposable income and consumer spending. This is occurring alongside a counterintuitive trend: despite “America First” policies and tariffs aimed at bolstering US trade, emerging markets are thriving. This is partially attributed to the relocation of supply chains out of China, benefiting countries in Southeast Asia and Mexico. Furthermore, the devaluation of the US dollar makes US products more affordable for these developing economies. Digitization and the subsequent rise of e-commerce are also critical factors, acting as a catalyst for growth across both emerging and developed markets, with e-commerce expected to gain market share over traditional commerce.

II. Stock Spotlights & Company Overviews

Thomas Hughes presented three emerging market stocks with strong potential:

• DLO (Uruguay): A fintech company providing payment and cross-border solutions for e-commerce across Latin America, Africa, and Southeast Asia. DLO’s growth is accelerating, and analysts have a positive outlook. The company benefits from the increasing digitization and the expanding middle class, facilitating both consumer payments and business-to-business transactions. DLO is a multi-regional operator, not solely focused on Uruguay. The stock has risen approximately 50-60% in the past year. AI integration is expected to further enhance its operations and customer acquisition.
• Grab (Singapore): A “super app” based in Southeast Asia, offering ride-hailing, fintech services, and e-commerce solutions. Grab is also exploring autonomous driving technology with plans for service launches in the near future. Hughes has been bullish on Grab for several years, noting a recent surge in positive analyst and institutional sentiment. While similar to Uber and Lyft, Grab offers a broader range of services. Grab is currently dominant in Singapore, Thailand, Vietnam, and Malaysia, areas where Uber and Lyft have limited presence. Southeast Asian markets have demonstrated strong economic performance this year.
• Arco Dorado (Latin America): McDonald's franchiser for Latin America, the largest franchiser outside the US. The company exhibits solid growth (mid-single digits) and offers a high dividend yield. It provides exposure to the established McDonald's brand with the added benefit of emerging market growth. Arco Dorado operates across major Latin American countries like Brazil and Argentina and is poised to benefit from market share gains and margin recovery, as well as the upcoming World Cup. It is considered a “blue chip” stock within the emerging market context.

III. Investment Logistics & Risk Assessment

Investors can access information on emerging market stocks through platforms like MarketBeat, utilizing search functions and screening tools to build watchlists. Diversification is strongly recommended, as highlighted by a previous discussion with a macroeconomist, who stated that investors are “leaving money on the table” by solely investing in US stocks.

Hughes emphasized that all stocks carry risk, but emerging market stocks are inherently riskier due to the volatility of the underlying economies. He advised a cautious approach: “small small bites and build a position over time.”

IV. Regional Opportunities & Future Outlook

Beyond the three highlighted stocks, India was identified as a particularly promising emerging market due to its large population, rapidly growing middle class, accelerating digitization, and increasing interest from AI hyperscalers. The Middle East, particularly Saudi Arabia and Dubai, is also gaining attention due to investments in AI and electric vehicle (EV) technology.

Hughes believes Southeast Asia, including India, represents the most compelling emerging market opportunity due to its greater number of companies, opportunities, and consistent growth.

Notable Quotes:

• “Diversification is good. Emerging markets are a high growth sector of the market and I think it's important to be to be exposed to it.” – Thomas Hughes
• “You’re leaving money on the table if all of your investments are only in US stocks.” – Macroeconomist (as referenced by Hughes)

Technical Terms:

• Fintech: Financial technology – companies utilizing technology to improve or automate financial services.
• Super App: A mobile application that offers a variety of services, such as ride-hailing, payments, and e-commerce, all within a single platform.
• Hyperscalers: Companies that provide massively scalable cloud computing services (e.g., Amazon, Microsoft, Google).
• Moving Averages: A technical analysis tool used to smooth out price data and identify trends.
• Critical Resistance Points: Price levels on a stock chart where the price has historically struggled to break through.

Logical Connections:

The discussion flowed logically from the macroeconomic context of emerging market growth to specific stock recommendations. The rationale for each stock was tied back to the broader trends of digitization, middle-class expansion, and shifting supply chains. The conversation also addressed practical considerations for investors, such as how to access these markets and manage risk.

Data & Statistics:

• DLO stock up 50-60% in the past year.
• Arco Dorado exhibits mid-single digit growth.
• Southeast Asian markets demonstrated strong economic performance in 2025.

Conclusion:

Emerging markets present a compelling investment opportunity for 2026, driven by factors like middle-class growth, digitization, and shifting global supply chains. While riskier than developed markets, the potential for higher returns makes diversification into these regions a worthwhile consideration for investors. The stocks highlighted – DLO, Grab, and Arco Dorado – represent diverse approaches to capitalizing on these trends, ranging from fintech innovation to established franchise models. India and the Middle East also warrant attention as promising emerging market regions.