The ongoing war in the Middle East has driven up oil prices and increased volatility in global financial markets, affecting emerging markets that had recently shown strong performance. In 2025, emerging markets outperformed developed markets for the first time since 2017, with the MSCI Emerging Markets index rising 34%. However, this momentum has shifted back towards developed markets as investors seek safety amidst geopolitical tensions. Despite this, emerging markets are still trading at a 40% discount compared to their developed counterparts, presenting potential opportunities for investors. Portfolio managers from firms like Vanguard, VanEck, and BlackRock point to improving economic fundamentals and decreasing interest rates as factors that could favor emerging markets. They highlight Brazil, Mexico, Peru, and Turkey as attractive options, particularly due to their exposure to commodities and favorable interest rate cycles. Brazil's stock market has surged 74% since its 2024 lows, while Turkey's economic growth and low debt levels are seen as strengths. Additionally, less-followed markets such as Pakistan, Kenya, and Egypt are expected to benefit from declining inflation and high real interest rates. Investors are encouraged to focus on countries with improving fundamentals while remaining cautious of currency risks and the potential for prolonged geopolitical instability.