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The last time emerging markets were doing this badly the term “emerging markets” hadn’t been coined yet.

That spells opportunity, and the greatest spoils might go to those investors who are the boldest and also willing to look past that poorly-defined category. The benchmark for how emerging markets stocks are doing is a widely followed index maintained by MSCI that has returned less than 4% annually in the past five years, compared with nearly 12% for global equities and more than 15% for U.S. stocks.

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Dig into any of those broad categories, though, and there are clear leaders and laggards. A whopping 65% of the MSCI All Country World Index’s market value, including nine of its top 10 stocks, were American as of the end of October. The MSCI Emerging Markets Index has been dragged down in large part since 2020 by China, where a housing crisis and a heavy-handed approach to technology firms by leader Xi Jinping have depressed valuations. Alibaba Group and Tencent Holdings were two of the world’s most valuable companies four years ago, before the tech crackdown.

If not for the massive surge of the MSCI index’s Chinese components in September on renewed stimulus hopes, the overall picture for emerging-markets stocks would be even worse. India, in no small part because it isn’t China, has seen huge foreign and domestic investor interest and now has the third largest weighting in the emerging-markets index. But it also is one of the world’s pricier markets.

Emerging markets outperformed developed market stocks in the century’s first decade as commodity prices boomed and the tech and housing bubbles dented the U.S. market. Today, though, they are much cheaper as a multiple of earnings, and not solely because of China.

Just buying an emerging-markets index fund and betting on the performance pendulum swinging back could be a decent strategy. Bolder investors might be able to do better: The most enticing opportunities are where skepticism is highest.

For example, Mexico and the multinational companies that use it as a base to sell products destined for the U.S. are in President-elect Donald Trump’s crosshairs. Newly-elected leftist President Claudia Sheinbaum also faces violent drug cartels and protests over changes to the country’s judiciary. But the MSCI Mexico Index has gone absolutely nowhere, with a slightly negative return over the past decade and a forward price-to-earnings ratio of around 10 times—less than half that of the U.S. market.

(Bloomberg) -- Traders snapped up shares in blue-chip and small-cap stocks after a positive reading on US business activity. The dollar rose, on course for an eighth straight week of gains, the currency’s longest run of the year.

The S&P 500 was little changed, while the blue-chip Dow Jones Industrial Average climbed 0.5% after data showed S&P Global flash November composite output index for service providers and manufacturers advanced to 55.3 — the highest level since April 2022. Economically sensitive shares outperformed, with the Russell 2000 index of smaller firms climbing 1%. US government bonds were mixed and traded in narrow ranges.

Bank of America Corp. strategists warned that the Nasdaq 100 — which has rallied more than 4% this month — was approaching a level versus the S&P 500 that could trigger the unwinding of the trade favoring US equities. The tech-heavy gauge slipped 0.2%.

Investors have piled into US stocks in November, spurred on by expectations that Donald Trump’s economic policies to cut tax rates and support American industry will drive corporate profits higher. During the same period, European equities have been largely flat on the back of a lackluster economy and fears over geopolitical tensions.

“We had a knee-jerk reaction after the election when the US market went up and all others struggled,” said Guy Miller, chief market strategist at Zurich Insurance Co. “Markets like Europe are priced for the advantage US has, so some money will be gravitating to the major laggards.”

The dollar was on track for its longest streak of weekly wins since September 2023. The currency has risen around 2.5% so far this month, adding to October’s gains of nearly 3%.

“The US dollar’s run can continue,” said Peter McLean, head of multi-asset portfolio solutions at Stonehage Fleming. “We also have those geopolitical tensions, which are escalating at the moment. It’s natural for investors to seek refuge in the dollar.”

The rally in Bitcoin lost some steam after the cryptocurrency earlier set a fresh high on bets that Trump’s support for crypto and a looser regulatory environment will help the industry.

The latest developments included Securities and Exchange Commission Chair Gary Gensler’s decision to step down in January. His tenure was marked by a flurry of crypto enforcement actions, which the industry expects will peter out under Trump.

(Bloomberg) -- Stocks edged higher after a measure of US manufacturing activity came in ahead of estimates. The dollar rose, on course for an eighth straight week of gains, the currency’s longest run of the year.

The S&P 500 climbed 0.2%, while the tech-heavy Nasdaq 100 was little changed after S&P Global released data showing the US preliminary services purchasing managers’ index for November hit 57, higher than economists’ forecasts. US government bond yields pared a drop.

Bank of America Corp. strategists warned that the Nasdaq 100 — which has rallied more than 4% this month — was approaching a level versus the S&P 500 that could trigger the unwinding of the trade favoring US equities.

Investors have piled into US stocks in November, spurred on by expectations that Donald Trump’s economic policies to cut tax rates and support American industry will drive corporate profits higher. During the same period, European equities have been largely flat on the back of a lackluster economy and fears over geopolitical tensions.

“We had a knee-jerk reaction after the election when the US market went up and all others struggled,” said Guy Miller, chief market strategist at Zurich Insurance Co. “Markets like Europe are priced for the advantage US has, so some money will be gravitating to the major laggards.”

The dollar was on track for its longest streak of weekly wins since September 2023. The currency has risen around 2.5% so far this month, adding to October’s gains of nearly 3%.

“The US dollar’s run can continue,” said Peter McLean, head of multi-asset portfolio solutions at Stonehage Fleming. “We also have those geopolitical tensions, which are escalating at the moment. It’s natural for investors to seek refuge in the dollar.”

The rally in Bitcoin lost steam after the cryptocurrency earlier set a fresh high on bets that Trump’s support for crypto and a looser regulatory environment will help the industry.

The latest developments included Securities and Exchange Commission Chair Gary Gensler’s decision to step down in January. His tenure was marked by a flurry of crypto enforcement actions, which the industry expects will peter out under Trump.

S&P Global’s composite Purchasing Managers’ Index for the euro area dipped back beneath the level that separates growth from contraction in November. The market-implied odds of a 50 basis-point cut by the European Central Bank in December rose to 50%, from about 15% on Thursday. The region’s sovereign bonds rallied while the euro dropped to a two-year low.

(Bloomberg) -- Stocks struggled to find footing as investors searched for value in other regions following this month’s rally in US equities. The dollar rose, on course for an eighth straight week of gains, the currency’s longest run of the year.

The S&P 500 edged higher, while the tech-heavy Nasdaq 100 was little changed. Friday’s weakness in US equities coincided with stock gains in Europe and Japan.

Bank of America Corp. strategists warned that the Nasdaq 100 — which has rallied more than 4% this month — was approaching a level versus the S&P 500 that could trigger the unwinding of the trade favoring US equities.

Investors have piled into US stocks in November, spurred on by expectations that Donald Trump’s economic policies to cut tax rates and support American industry will drive corporate profits higher. During the same period, European equities have been largely flat on the back of a lackluster economy and fears over geopolitical tensions.

“We had a knee-jerk reaction after the election when the US market went up and all others struggled,” said Guy Miller, chief market strategist at Zurich Insurance Co. “Markets like Europe are priced for the advantage US has, so some money will be gravitating to the major laggards.”

S&P Global’s composite Purchasing Managers’ Index for the euro area dipped back beneath the level that separates growth from contraction in November. The market-implied odds of a 50 basis-point cut by the European Central Bank in December rose to 50%, from about 15% on Thursday. The region’s sovereign bonds rallied while the euro dropped to a two-year low.

Investors’ focus will turn toward US business activity data due later Friday to gauge the strength of the economy and the Federal Reserve’s path for interest rates. Traders see just above a 50-50 chance for a cut in December after almost fully pricing in a reduction at the beginning of the month.

“In-line to slightly soft data will be the best outcome for stocks, as that implies solid growth and encourages a rate cut in December,” said Tom Essaye, founder of The Sevens Report.

The dollar was on track for its longest streak of weekly wins since September 2023. The currency has risen around 2.5% so far this month, adding to October’s gains of nearly 3%.