Manpreet Gill: Why emerging markets are poised to benefit from a weaker US dollar in H2 2026

In this interview, Manpreet Gill, Chief Investment Officer for Africa, Middle East and Europe (AME), discusses the bank’s outlook for global markets, the US dollar, emerging markets and what the changing landscape means for investors in Nigeria and across Africa.

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Q: Looking back at the first half of 2026, what have been the biggest investment lessons for investors?

Manpreet Gill: The first half of the year reinforced one of the most important principles of investing: staying disciplined through periods of uncertainty. We often talk about diversification, resilience and remaining invested during market volatility, and this year demonstrated exactly why those principles matter.

Despite heightened geopolitical tensions in the Middle East and a sharp spike in oil prices, global markets proved remarkably resilient. Global and Asian equities both delivered gains of around 10% during the first half of the year, outperforming expectations despite an uncertain backdrop.

The biggest lesson for investors is that reacting emotionally to short-term market events rarely produces the best outcomes. Those who remained diversified, stayed invested and focused on long-term fundamentals were ultimately rewarded.

Q: What are Standard Chartered’s key investment themes for the second half of 2026?

Manpreet Gill: Despite the uncertainty we’ve seen this year, we remain constructive on the global investment outlook. Three themes continue to shape our positioning for the second half of 2026.

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First, we continue to favour global equities because corporate earnings growth remains resilient, not just within the technology sector but across major global markets. While seasonal bouts of volatility are always possible, we view any market pullbacks as opportunities to add exposure rather than reasons to exit.

Second, we continue to see attractive income opportunities in corporate bonds and emerging market dollar bonds, particularly African Eurobonds. Compared with developed market government bonds, investors are still being well compensated for the level of risk they are assuming.

Finally, diversification remains critical. We continue to maintain an overweight position in gold and other alternative assets because they provide valuable portfolio diversification and help improve resilience during periods of uncertainty.

Q: Which equity markets offer the strongest opportunities over the remainder of the year?

Manpreet Gill: Our preferred equity markets remain the United States and Asia.

The US continues to benefit from resilient earnings growth, with momentum broadening beyond the semiconductor sector into other parts of the economy. In Asia, while much of the recent rally has been driven by markets such as Korea and Taiwan, we believe opportunities are broadening across the region, including Japan and several emerging Asian markets.

As earnings growth becomes more diversified, we expect broader participation in the equity rally during the second half of the year.

Q: Despite recent strength in the US dollar, why do you still expect it to weaken over time?

Manpreet Gill: The recent appreciation in the US dollar has largely been driven by temporary factors, particularly geopolitical uncertainty and expectations that US interest rates could remain higher for longer.

We believe much of that support will gradually fade. Assuming inflation continues to moderate and there are no significant new geopolitical shocks, US bond yields should ease over time, reducing support for the dollar.

Historically, periods of a weaker US dollar have encouraged stronger capital flows into emerging markets, improved investor sentiment and supported risk assets. We believe those conditions are likely to re-emerge during the second half of the year.

Q: You noted that the US dollar has strengthened recently. How sustainable is this rally, and what are the likely implications for emerging markets like Nigeria, particularly for the naira, capital flows and inflation?

Manpreet Gill: While the US dollar has strengthened recently on the back of geopolitical uncertainty and expectations that US interest rates could remain higher for longer, we do not expect this to become a sustained long-term trend. As inflation continues to moderate and monetary conditions gradually normalise, many of the factors supporting the dollar are likely to ease.

For emerging markets, including Nigeria, prolonged dollar strength can place pressure on domestic currencies, dampen foreign capital inflows and contribute to higher imported inflation. Conversely, a weaker or more stable US dollar would create a more supportive environment for the naira, improve investor appetite for emerging market assets and help moderate inflation by lowering the cost of imports.

Ultimately, Nigeria’s outlook will depend on the interaction between global market conditions and the continued implementation of domestic reforms. A more supportive external environment, coupled with consistent policy execution at home, should strengthen investor confidence, improve capital inflows and provide greater support for macroeconomic stability.

Q: What does this outlook mean specifically for investors in Africa?

Manpreet Gill: A weaker US dollar generally creates a far more supportive environment for emerging market assets. For African investors, we continue to see compelling opportunities in emerging market dollar bonds, including African Eurobonds, where yields remain attractive relative to the underlying risks.

Many African asset classes have already performed strongly this year, so investors should become increasingly selective. At current valuations, emerging market dollar bonds continue to offer one of the most compelling risk-reward opportunities available.

For investors seeking income opportunities, African Eurobonds remain one of the most attractive segments within the emerging market fixed-income universe.

Q: Geopolitical tensions have remained elevated throughout the year. How have markets demonstrated such resilience despite these events?

Manpreet Gill: Markets have demonstrated remarkable resilience despite a succession of geopolitical shocks that many expected would derail investor confidence.

Traditionally, a sharp increase in oil prices would have placed much greater pressure on economic growth and equity markets. Instead, global equities recovered quickly and volatility remained relatively contained.

With oil prices now largely returning to pre-conflict levels, one of the biggest risks to global growth has eased considerably, allowing the broader economic expansion to continue. That resilience has reinforced our confidence in the broader investment outlook.

Q: Gold has underperformed expectations this year. Why do you continue to maintain an overweight position?

Manpreet Gill: Gold has been the one asset where our expectations have taken longer to materialise. We anticipated only a modest correction following its strong rally, but investor positioning remained elevated for longer than expected.

However, our conviction remains unchanged. Central banks, particularly across emerging markets, continue to accumulate gold, creating strong structural demand that should remain supportive over the longer term.

Gold also continues to serve as an effective hedge against geopolitical uncertainty and an important anchor for diversified portfolios.

Q: Has the first half of the year changed your investment outlook in any meaningful way?

Manpreet Gill: Broadly speaking, the first half reinforced rather than changed our investment thesis. The resilience of global equities exceeded expectations, particularly given the geopolitical backdrop, while economic growth also proved more durable than many anticipated despite significantly higher energy prices.

The main adjustment we’ve made is becoming more selective after the strong gains recorded across several asset classes. We continue to favour equities and emerging market bonds, but our focus is increasingly on identifying the best risk-adjusted opportunities rather than simply chasing performance.

Q: What are the biggest risks investors should monitor during the second half of 2026?

Manpreet Gill: The most important variable remains the US labour market.

At present, employment conditions are healthy, they are neither overheating nor deteriorating materially, which supports our expectation that the Federal Reserve can maintain a relatively stable policy stance.

However, if the labour market were to strengthen unexpectedly, inflationary pressures could re-emerge, forcing interest rates to remain higher for longer. That would likely strengthen the US dollar and create a more challenging backdrop for emerging market assets, including those across Africa.

The key question for investors is whether inflation proves sticky enough to delay monetary easing. That will be one of the most important drivers of markets during the remainder of the year.

Q: What is your overall message to investors as they position their portfolios for the remainder of 2026?

Manpreet Gill: The first half of 2026 reinforced an important lesson: markets are often far more resilient than headlines suggest. Investors who remained disciplined, stayed diversified and focused on long-term fundamentals were rewarded despite heightened geopolitical uncertainty.

As we look ahead, we continue to see compelling opportunities across global equities, emerging market dollar bonds and gold. While volatility is inevitable, it should not distract investors from the broader investment landscape.

History consistently shows that investors who focus on long-term fundamentals rather than reacting to short-term market noise are generally best positioned to achieve sustainable returns. Our message is therefore simple: remain diversified, stay invested and maintain a long-term perspective. That discipline will continue to be one of the strongest drivers of investment success in the second half of 2026 and beyond.