Strategists at JPMorgan Chase stated that emerging market equities are poised for a significant new wave of recovery in the second half of this year, continuing to favor their outperformance relative to developed market stocks.

The strategy team, led by Mislav Matejka, noted that the investment boom in artificial intelligence remains ongoing, while related emerging market assets offer lower valuations and greater upside potential.

The team anticipates that subsequent declines in U.S. Treasury yields and a weaker U.S. dollar will benefit emerging market stock markets.

It is expected that the situation in Iran will stabilize, alleviating market concerns over crude oil supply.

The current valuation appeal of emerging markets is prominent: the relative price-to-earnings ratio is at a historically extreme low compared to developed markets, while institutional underweight positioning remains low, and the pace of capital inflows is accelerating.

Regarding the European market, there is strong optimism for the mining, semiconductor, and industrial sectors.

The performance of cyclical consumer stocks is expected to improve in the second half of the year, with current valuations at relatively low levels. However, it is important to note that these sectors are unlikely to see strong performance until clear signs of easing tensions in Iran emerge.