After joint US-Israeli attacks on Iran over the weekend sparked a conflict, causing oil prices to surge, investment managers discuss the impact on emerging market assets.

Despite fears about the impact of the Middle East conflict, which is testing the resilience of emerging markets, Michael Bourke, head of emerging market equities at London-headquartered M&G Investments, remains quite positive about the outlook for these markets. Samy Chaar, chief economist, CIO Switzerland at Swiss private bank Lombard Odier, also told this news service yesterday that he will remain invested in Asia, which makes up 70 per cent of emerging markets. 

Emerging markets outperformed developed ones in 2025, driven by a weaker US dollar, stronger relative earnings revisions and improving return on equity (ROE). Corporate governance has also been improving in the region. However, the conflict in Iran sent oil prices to new highs, sparking inflation risks, strengthening the dollar, and making emerging market assets and oil importers vulnerable.

But Bourke, who manages the M&G Global Emerging Markets Fund, said that emerging markets had a strong start to the year. “Emerging markets are quite robust and valuations are attractive. Economic growth in the region is also double that of the US and four times as much as Europe,” Bourke told this news service at a London media event this week organised by FundCalibre. Emerging markets now account for nearly 80 per cent of global GDP growth. 

Bourke is overweight in Brazil, Indonesia, South Africa and Mexico. He was overweight in China and South Korea, but recently trimmed holdings down, and sold off Korea’s SK Hynix. Top sectors include consumer discretionary, financials, real estate, industrials and energy.

Norbert Rücker, head of economics and next generation research at Swiss private bank Julius Baer, has a base-case scenario that is short-lived, with an intense spike in oil and gas prices. He sees oil prices topping in the $80s to $90s, and gas prices in the €40s ($46.5s) to €50s in March before easing into summer, recognising the dynamics and uncertainty of the situation. This week, Rücker reiterated his neutral views on oil and global gas prices, taking into consideration the current war in the Middle East.

Pictet Wealth Management baseline scenario assumes de-escalation in the Middle East, but lingering concerns over energy supply disruptions are likely to justify a higher risk premium, keeping oil and gas prices elevated for some time. Its long-term forecast for oil prices remains unchanged at $60 per barrel, consistent with a large oversupply in the market.

Chaar also believes that the conflict is likely to last a matter of weeks, rather than months, with oil prices peaking at $85. "US President Donald Trump doesn’t have the appetite to let the conflict escalate," he said at a London media event yesterday. However, if it does carry on for months, he sees oil prices peaking at $115-125. He highlighted how the US is far better placed to withstand the energy supply shock. Both the US and Latin America are net exporters of fuel whilst other regions, like the UK, Europe, Asia, are net importers and will be harder hit.  However, despite the risks, Chaar remains invested across the US, Europe, Asia, and he is not to looking to sell or change portfolios as a result of the conflict.

Asian tech: "It is taking us off guard currently as we are exposed to Asia. The reason we like Asia is tech. US tech is quite expensive so we shifted some of our US tech investments to Asia last year where it is cheaper. We bought Korea,Taiwan, and it is doing pretty well. It is still doing pretty well. In my base case of a $10 oil price shock, we will still want to be invested in Asia, including Asian credit and Asian equities," Chaar said. Nevertheless, he noted that this shock temporarily creates a significant headwind for Asia and tailwinds for Latin America. He also believes that the tariff uncertainty caused by Trump remains one of the biggest obstacles to growth.

Jeremy Gleeson, chief investment officer of global technology equity at Allianz Global Investors, also told this news service this week that emerging market valuations remain attractive and that they can pass on any higher energy costs. Tech has provided strong returns over the long-term and IT spending continues to grow, with Gartner forecasting 9.8 per cent year-on-year growth worldwide in 2026.

In the Allianz Global Hi-Tech Growth Fund, Gleeson is overweight in Asian tech, with significant exposure there. Top holdings include Taiwan Semiconductor Manufacturing Company (TSMC) and Chinese tech multinational Tencent where he is overweight as well as Korean-based semiconductor memory manufacturer SK Hynix and Samsung Electronics. He is also heavily exposed to the US, but remains underweight there. Holdings include US tech firms Microsoft, Nvidia and Alphabet.

A number of wealth managers have been stepping up exposure to emerging market equities recently. Benjamin Melman, global chief investment officer at Paris-headquartered Edmond de Rothschild Asset Management, for instance, has increased his exposure to emerging markets recently. See coverage here , here and here. 

Nevertheless, Sonal Desai, chief investment officer of FranklinTempleton fixed income, believes that the resilience of emerging markets will be tested as a result of the Iran conflict. “Here we might see the strongest impact after a very strong start to the year in emerging market assets. This crisis will likely underline again the divide between oil exporters and oil importers, with the latter in a much more vulnerable position. Emerging market assets will likely now feel the effects of the dollar's strength and potentially higher US interest rates against the backdrop of higher oil prices,” Desai said in a note.