Emerging market bull market trend sweeps the globe! Supreme Court tariff ruling ignites the Baillie Gifford Emerging Markets ETF to a new high.

After the US Supreme Court overturned the global tariff policy led by US President Donald Trump and ruled the Trump tariffs as illegal, emerging market assets once again saw a strong uptrend. A benchmark index measuring emerging market currencies eliminated weekly losses, and the trading price of an increasingly popular emerging market exchange-traded fund (ETF) on the US stock market, which has been gaining traction this year, surged to a record high. Michael Hartnett, stock market strategist at Bank of America Corp, known as the "most accurate strategist on Wall Street," has emphasized multiple times recently that as the "American exceptionalism" gradually crumbles and the weak US dollar, global growth shifts from the US to a more broad market, emerging markets are poised to outperform the US market, moving towards a new bull market cycle. After Trump proposed alternative plans to his signature economic policies, the MSCI Emerging Markets Currency Benchmark Index rose on Friday, maintaining its gains and completely reversing weekly losses. The iShares MSCI Emerging Markets ETF trading price (EEM.US) issued and managed by BlackRock, Inc., the world's largest asset management giant with cumulative assets totaling $28 billion, achieved a rare "ten consecutive gains," once again surging to a historical high, with trading volume exceeding the 20-day average level by 36%. Driven by the strong bull market trends of core component stocks such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, the world's largest chip manufacturer, as well as the two major super memory chip giants based in South Korea - Samsung Electronics and SK Hynix - the price of iShares MSCI Emerging Markets ETF has repeatedly hit historical highs, with a year-to-date increase of 14%, significantly outperforming the S&P 500 Index and the Nasdaq 100 Index. Under the backdrop of the "American exceptionalism" and "selling off America" rhetoric, as well as the booming global AI trend, the South Korean stock market, after experiencing a 75% surge in its benchmark index in 2025, continues to rank as the "world's craziest stock market" in 2026 - with a year-to-date gain of 40%. Therefore, the emerging market stock index covering core companies in the global AI computational power industry chain, such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Hon Hai, SK Hynix, Samsung, Alibaba Group Holding Limited Sponsored ADR, and Tencent, can be said to lead the global stock market indices. Global investors are pouring funds into emerging market funds at a record pace, reflecting the "global capital allocation adjustment". Meanwhile, core ETF assets related to Asian sovereign currencies and sovereign bonds have also seen strong inflows this year. The latest bullish catalyst for emerging markets - the Supreme Court tariff ruling "This should be slightly positive for emerging market currencies (EMFX) as it emphasizes the huge uncertainty at the US government policy level," said Alvaro Vivanco, emerging markets macro strategist at Wells Fargo. "This has fueled diversification theme allocation trends." Although after the Supreme Court tariff ruling was announced, US President Trump told reporters that he will impose a 10% tariff globally under Section 122 of the 1974 Trade Act, it is still unclear whether the US government needs to refund the tariffs already collected. Due to market concerns that US finances could deteriorate significantly due to tariff refunds, the Supreme Court's decision led to a significant increase in long-term US Treasury yields, with traders collectively giving a negative response when evaluating the risks of widening US budget deficits. "The 10% Section 122 tariff benchmark is likely significantly lower than many higher equivalent tariff rates currently in place," said Dan Pan, senior economist at Standard Chartered Bank in New York. Earlier that day, traders digested data showing soft US economic activity and persistent inflation. The latest US Gross Domestic Product (GDP) growth rate in the fourth quarter was significantly lower than economists' expectations, and a key measure of underlying inflation favored by the Federal Reserve also exceeded economists' expectations. These data provide completely contradictory signals about the Fed's rate outlook, and traders continue to closely monitor the scale and timing of the Fed's next move. Although tensions between the US and Iran remain, most Wall Street strategists believe that the tensions will not escalate into a full-scale war, thus not hindering the strong uptrend in emerging markets since the beginning of the year. Trump said on Friday that the US government is considering limited military strikes against Iran. With the US Supreme Court's rejection of Trump's tariffs becoming the latest bullish catalyst, emerging market stock market benchmark indices have seen a significant increase for the second week, continuing the strong rebound trend driven by core companies in the artificial intelligence compute chain. "The fundamental drivers of emerging market stock index are likely to remain largely unchanged," said Wolf von Rotberg, stock market strategist at J Safra Sarasin. "The record expansion of AI capital expenditure by US hyperscalers has strongly supported their demand for AI compute infrastructure in 2026, which is also a driving factor for rising metal prices." The rally in emerging markets is far from over Proposing the concept of the "Magnificent Seven" (the seven major US technology giants) and successfully predicting the US tech stock bull market and the trends in emerging markets in recent years, Bank of America Corp's stock market strategist, Michael Hartnett, known as the "most accurate strategist on Wall Street," has repeatedly emphasized that the next round of global stock market bull market structural leadership forces will be emerging markets and US small-cap stocks. As uncertainty surrounding the tariff and fiscal policies led by the Trump administration has led some large investors to withdraw from the US market, coupled with overvaluation and high market concentration in the US stock market, and the weak US dollar benefiting emerging market debt repayment and yield performance, the rhetoric of "American exceptionalism" and "selling off America" has resurfaced, with funds seeking more diversified allocations. Since 2025, there has been a rotation of global funds towards emerging markets - data shows that the MSCI Emerging Markets Index significantly outperformed developed markets, marking the strongest relative performance since 2017. Hartnett of BofA has repeatedly emphasized the inevitable global asset allocation shift from a heavy dependence on US tech stocks towards emerging market stocks, commodities, and gold as major asset categories. He emphasized that the high concentration of US tech stocks and the rising risk of an AI-related tech stock valuation bubble, while emerging markets and international assets are more attractive in terms of valuation and growth expectations - especially in the context of a reversal of the US dollar cycle. Another Wall Street financial giant, Goldman Sachs Group, Inc., recently released an institutional asset allocation report showing that global market funds are shifting focus from US stocks/dollar assets towards global stocks (especially emerging market stocks), not just as a short-term trend of fund rotation. Wall Street strategists have recently held an optimistic bullish view on emerging markets, aligning with the market strategy of "selling off US assets and seeking global growth opportunities," broadly interpreted by investors as a global capital reallocation process towards de-dollarization/selling off US assets.