Bank of America's Chief Investment Strategist Michael Hartnett has projected that international equities will outperform U.S. stocks during the latter half of the 2020s, marking a potential shift from the decade-long dominance of American markets. According to Hartnett's analysis, international stocks' representation in global market capitalization has recovered to 38%, while emerging markets exchange-traded funds are experiencing their most sustained winning streaks in recent years, signaling renewed investor interest in non-U.S. markets.
The anticipated rebalancing reflects structural changes in the global economy, particularly regarding technological disruption. Hartnett's outlook suggests that artificial intelligence advancements may disproportionately impact the U.S. economy, which is heavily weighted toward services and technology sectors. In contrast, emerging markets with manufacturing-focused economies may prove more resilient to AI-driven disruption, potentially supporting their relative outperformance.
This forecast represents a notable reversal from the concentrated growth seen in U.S. equities over the past decade, when American large-cap technology stocks and service-oriented companies substantially outpaced international counterparts. The shift in market dynamics underscores evolving investor sentiment regarding geographic diversification and the uneven effects of technological innovation across different economic structures.