John Woods: It’s Emerging Markets' «Time in the Sun»
With ongoing rotation out of the US amid a weakening dollar, Lombard Odier’s Asia chief investment officer John Woods believes it is now emerging markets' «time in the sun».
The US under President Donald Trump has demonstrated early in 2026 that it will continue its expansionist trajectory, most notably with military action in Venezuela and the recent intensification of threats against Iran. According to John Woods, chief investment officer and head of investment solutions, Asia at Lombard Odier, the America First concept will play a key role in characterizing markets and this trend is unlikely to end anytime soon.
«This idea of focusing on […] self-interest rather than a global responsibility has all kinds of implications,» Woods said in a virtual media briefing.
Dollar Weakening to Sustain
In order to fund Washington’s ambitions, be it the promotion of domestic manufacturing or the expansion of military capabilities, it will be necessary to minimize the cost of borrowing via a weaker dollar.
«We have seen in comments just recently by President Trump yesterday that he’s comfortable with a weaker dollar. And if you overlay that with our expectation that rates will be cut in the second half of this year by three, 25 basis points, then we think the direction of travel for the dollar is lower,» Woods explained.
Investor Rotation to EM
Woods believes that, partly due to the weakening greenback, investors are shifting out of the US to other opportunities, including emerging markets (EM), which have historically benefited from a softer dollar. Within EM, there is interest in Chinese equities, especially in tech and sustainability-related sectors, as well as EM hard currency debt.
«We're seeing so much rotation. We've seen decades of underperformance of EM and I think it's now their time in the sun,» Woods added.
Overall, Lombard Odier is overweight in equities with a preference for EM while being underweight in the US. Within fixed income, it is underweight sovereign bonds and overweight EM hard currency debt. The bank is also overweight in gold as a means of hedging against risks, including in geopolitics.
