Emerging Markets to Deliver 10.9% Annual Returns; India, China to Lead EPS Growth

Still, amidst global uncertainties and the tariff crisis, India is better positioned than other emerging equity markets. They are set to make their presence felt on a global scale. For instance, Goldman Sachs estimates that emerging markets such as India, powered by earnings growth, would outperform their large market peers, namely the US, Europe, and Japan, over the next 10 years, returning 10.9% annually to investors.

This projects a return of 6.5% in US dollar terms for the US stock market during this period, 7.1% for Europe, 8.2% for Japan, and 10.3% for Asian markets excluding Japan.

Strong earnings growth will be seen in emerging markets, with India and China leading the way, according to the report, with large rises in EPS. With the help of policy reforms, shareholder returns in both countries are expected to improve in the future. Goldman Sachs expects the S&P 500 index to deliver an average annual return of 6.5% over the next decade.

The report states that earnings growth in India will grow at a compound annual rate of 13% over the next 10 years due to strong economic fundamentals and favorable demographic conditions. While valuations remain a constraint, this does not dominate the global equity market outlook.

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