Although not officially taking office yet, the incoming USA President Trump has already created "big trouble" for Emerging Markets Stocks. Partly due to the uncertainty of US government policy prospects and the threat of Trump's tariffs, the index tracking the Emerging Markets stock market has fallen into a correction Range.

On January 9, Thursday, the MSCI Emerging Markets Index, covering large-cap and middle-cap stocks from 24 Emerging Markets countries, declined by 0.4%, down 10% from the three-month high on October 2, 2024, and fell into a technical adjustment Range. Among the components of this index, South Korea's Samsung Electronics and Taiwan Semiconductor led the decline, affected by the Biden administration's expansion of export restrictions on the semiconductor industry.

Wall Street Journal noted that two months ago, when the election polls indicated Trump's election as president, investors in Emerging Markets stocks reacted by selling off promptly. Data from Bank of America showed that in the first week following the US election, as of the week ending November 13, 2024, a total of $7.5 billion flowed out of Global Emerging Markets equity Funds, the largest single-week outflow scale in ten years since August 2015.

Commentators pointed out that the Assets of Emerging Markets have been declining since early October 2024. Although the Federal Reserve's rate cut in September initiated a loosening cycle, the strong inflation data in October and November led traders to bet that future Fed rate cuts would be fewer and smaller. Trump's election as president, along with his Republican Party sweeping both houses of Congress, exacerbated the inflationary pressure and pushed up US Treasury yields.

Henrik Gullberg, a macro strategist at Coex Partners, stated, "There is too much uncertainty regarding Trump's intentions, making it difficult to determine the direction of risk assets." He expects the market to be very volatile before Trump's inauguration on the 20th of this month and will react to his Posts and comments on Social Media.

Greg Lesko, Managing Director at Deltec Asset Management LLC, believes that stocks in Brazil and South Korea also dragged down the MSCI Emerging Markets Index. The assets of these two countries are affected by Brazil's fiscal concerns and the impeachment and arrest of South Korean President Yoon Suk-yeol.

Lesko expects these Emerging Markets to remain cautious until there is clearer policy understanding, which should be more evident soon. Many Emerging Markets stocks are very inexpensive, so significant opportunities are expected in the future, but patience is required.

Goldman Sachs' strategists have lowered their expected returns for Emerging Markets Stocks in 2025, reducing the expected year-end target for the MSCI Emerging Markets Index from 1200 points to 1190 points. Nonetheless, compared to the closing price of 1066 points on Thursday, Goldman Sachs still expects it to rise by the end of the year. Based on the target point, Goldman Sachs anticipates that by the end of 2025, the index will rise by 11.6% from Thursday's closing.

In fact, due to concerns that Trump's inauguration this month could initiate painful trade policies for Emerging Markets, and with US yields trending upward, Emerging Markets countries have recently rushed to lock in funds before Trump takes office as President of the USA.

Bloomberg reported earlier this week that, based on the scale of sovereign bond issuance, Emerging Market economies have set a record for the busiest start to the year in issuance. Data compiled by Bloomberg shows that in the first seven trading days of 2025, developing countries issued a total of 26 billion dollars in government bonds.

Sergey Goncharov, a Fund manager at Vontobel Asset Management in Miami, said that it's common for issuers to rush in at the beginning of the year, but this year they are definitely considering January 20, the day of Trump's inauguration.