Analyst Weekly September 15, 2025 From EM tech strength to record US buybacks, market drivers are stacking up ahead of the Fed’s first rate cut of 2025. With US growth still uneven and inflation expectations anchored, Powell is expected to deliver a 25 bp cut this week, but markets will be watching his guidance on…

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Analyst Weekly September 15, 2025

From EM tech strength to record US buybacks, market drivers are stacking up ahead of the Fed’s first rate cut of 2025. With US growth still uneven and inflation expectations anchored, Powell is expected to deliver a 25 bp cut this week, but markets will be watching his guidance on the pace of further easing just as closely.

Tech is the New EM Engine

Emerging markets (EM) have often been seen as volatile and hard to navigate, but the latest earnings season suggests things may be turning a corner.  While overall EM earnings growth was flat in Q2, the breadth of earnings revisions is improving for the first time in months, especially in Asia, thanks to tech strength and supportive policy moves.

• Semis lead the pack: The standout theme is technology. Companies tied to the global AI cycle are fueling earnings upgrades. Taiwan and South Korea, both tech-heavy markets, delivered solid profit growth thanks to strong demand for advanced chips. Taiwan’s TSMC and Korea’s SK Hynix are clear beneficiaries, with leadership in areas like AI accelerators and high-bandwidth memory.
• Internet shake-up: China’s big e-commerce firms like Alibaba, JD, and Meituan remain under pressure from intense competition, especially in food delivery and quick commerce. However, Alibaba’s cloud and international businesses are helping offset domestic challenges. Meanwhile, ASEAN internet firms such as Grab and Sea are thriving. They’re showing strong user growth, resilient profitability, and expanding into fintech and digital services. For investors looking at long-term structural growth in EM, this is a key theme: the digital economy is alive and well outside of China.
• Financials Regaining Strength: Another bright spot is financials. Chinese banks (like China Merchants Bank,  Bank of China) saw profits rebound in Q2, helped by higher fee income. Indian and Brazilian banks also reported resilient results, with names like ICICI Bank and Itau Unibanco highlighted as well-positioned leaders. Strong capitalization and steady loan growth make them standouts in regions that are still under-owned by global investors. For retail clients, this means the financial sector, long a backbone of EM indices, is regaining relevance as a driver of steady returns.
• Watch position sizes & FX Risk: EM moves can be sharp, pacing exposure helps manage swings– broad EM or Asia ex-Japan ETFs help smooth out country-specific shocks. Pair EM tech/financials with exposure to gold (a classic EM hedge) or developed markets. To eliminate currency risk, investors can invest in a currency hedged equity ETF; exchange-traded currency (ETCs); or through CFDs or spread bets.

Investment Takeaway: Emerging markets may look dull on the surface, but momentum is quietly building. Tech is thriving, banks are stabilizing, and policy support is boosting domestic demand. The feared “tariff shock” from US trade policy has been less severe than expected, giving exporters some breathing room. AI and tech cycles remain a global resilience factor, helping offset weak spots like consumer staples. Opportunities are broadening from Taiwan semis to Indian banks to Southeast Asian internet platforms. With valuations still cheap and growth picking up along with Fed rate cuts, EM exposure could be a way to balance portfolios tilted heavily toward US mega-caps.

Big Buybacks, Bigger Impact

US companies are buying back stock at record levels in 2025. Nearly $1 trillion in buyback announcements have been made so far this year, putting 2025 on pace to surpass last year’s total. Tech giants are leading the way;  Apple ($100B), Google ($70B), and Nvidia ($60B) all unveiled massive buyback programs this earnings season. Big banks like JPM ($50B), GS ($40B), WFC ($40B), and BAC ($40B) have also committed tens of billions each.

For investors, buybacks matter because they reduce the number of shares in circulation. That can boost earnings per share, provide price support, and signal that management is confident in the company’s future. But the activity is highly concentrated –  a handful of mega-caps represent about 66% of all buybacks this year. For retail portfolios tilted toward tech and financials, that concentration means buybacks could play an outsized role in driving returns.

VIX Slips as Markets Stay Pinned

Volatility keeps grinding lower (14.76), with the VIX sliding as key economic data passes without sparking major swings. Market focus has shifted more toward signs of labor market weakness than inflation, while the backdrop of possible stagflation, slower growth alongside sticky prices, remains part of the conversation. AI-related stocks beyond the “Mag 7” have been a bright spot, helping sentiment stabilize.

Still, dealer positioning into month-end suggests rallies are sold into and pullbacks are bought, keeping the S&P 500 range-bound. Once September options and quarter-end expirations are behind us, the market could trade more freely, though corporate buyback blackouts may remove a layer of support. With volatility low, some investors are eyeing October as a good window to add protection with strategies such as QQQ put spread collars – which cap upside in exchange for cheaper downside protection – drawing increased attention.

South Korean Stocks With Dynamic Recovery

The EWY (iShares MSCI South Korea ETF) ended last week with a 7% gain at 78.66 points. In the long term, there is still catching up to do compared to the U.S. and European stock markets. The last record high was reached at the end of 2020 at 96.20 points. The gap has now narrowed to 18%. In the medium term, investors have increasingly turned back to South Korean stocks. Since the low in April, the index has risen 62%, while the S&P 500 gained only 37% over the same period. From a technical perspective, EWY could continue its recovery in the coming weeks and months – at least as long as the support zone between 70.96 and 69.59 points (Fair Value Gap) holds.

EWY in the weekly chart. Source: eToro

Cloud Business Triggers a Surge in Oracle Shares

Oracle’s stock skyrocketed last week, gaining over 25%. Strong cloud deals fueled a massive order boom. In just one quarter, several multibillion-dollar contracts were signed, including with OpenAI, Nvidia, and TikTok. The order backlog surged to $455 billion — more than four times the previous year’s level. On the risk side, Oracle faces extremely high investments, which put pressure on cash flow and margins. In addition, there is a strong dependence on a few major customers.

The market was heavily overbought at times, but conditions have since eased somewhat. Investors should watch the reactions in the two Fair Value Gaps created by the rally: between $241 and $296, and between $219 and $234. Bullish reversal signals in these zones could indicate that a new upward move is about to begin.

Oracle in the daily chart. Source: eToro

Macro Calendar: All Eyes on Powell

The Fed is expected to cut interest rates on Wednesday for the first time this year (decision at 8:00 p.m.). Weakness in the labor market gives the Fed the green light for a cut. A small step of 25 basis points to a range of 4.00 to 4.25 percent is expected. By the end of 2026, markets expect a total of six small cuts. Persistently high inflation could slow this pace. That’s why the new quarterly projections from the central bank will be decisive. In June, the Fed projected core PCE inflation of 2.4% for 2026 and 2.1% for 2027. A downward revision would give stocks and bonds a boost. In addition, Jerome Powell’s press conference at 8:30 p.m. could provide key guidance on what happens after the September meeting.

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