Key points:
- U.S. stocks dominate global portfolios – knowingly or unknowingly: On average, investors hold ~65% of equity allocations in U.S. names, though the U.S. accounts for ~42% of global GDP.
- EMs contribute more and more to global GDP but remain under-owned: Emerging markets make up ~40% of global GDP and ~60% of growth, yet MSCI ACWI (All Country World Index) assigns them just ~11% weight.
- Flows are turning as the Fed cuts rates: A softer USD and easing liquidity support EMs tactically, while structural themes like demographics and digitization provide a long-term growth floor.
- The playbook: We provide a list of 15 stocks for consideration across AI hardware, digital platforms, Indian compounders, African fintech, resources, and dividend anchors in emerging markets as ideas for those looking to add EM exposure.
1. AI hardware & semiconductors – The EM engine of the AI supercycle
AI infrastructure spend is forecast to exceed $400bn annually by 2030. That spending goes straight into EMs:
- TSMC (Taiwan): With ~67% global foundry share, TSMC is the sole producer of Nvidia’s most advanced chips and invests $30–40bn annually in capital expenditure to maintain its leadership.
- Samsung Electronics (Korea): A diversified leader in both memory and logic chips, Samsung is aggressively expanding high-bandwidth memory (HBM) capacity to capture AI-driven demand.
- SK hynix (Korea): The company supplies nearly 80% of Nvidia’s HBM chips, and its HBM-related revenues are growing at over 50% annually.
Investor takeaway: U.S. AI names capture headlines, but EM semis control the picks-and-shovels of the build-out.
2. Platforms & fintech – Digitizing EM consumers
E-commerce penetration in EMs is ~15%, far below the U.S./EU at 25%.
- Tencent (China): Tencent operates the WeChat ecosystem with more than a billion users, generating stable revenues from gaming and advertising while expanding its cloud and fintech businesses.
- Alibaba (China): Alibaba has returned its cloud business to double-digit growth, with artificial intelligence adoption boosting utilization alongside its core e-commerce operations.
- Grab (SEA): Grab operates one of Southeast Asia’s largest super-apps, combining ride-hailing, food delivery, and an expanding financial services platform, making it a play on regional consumer digitization.
- MercadoLibre (LatAm): MercadoLibre reported 36% year-on-year net revenue growth and a 46% increase in total payment volume, underscoring the strength of its combined e-commerce and fintech platform across Latin America.
- Sea Ltd (SEA): Sea’s Shopee platform grew gross merchandise value by 27% year-on-year, while its SeaMoney loan book expanded by 46%, highlighting the company’s dual growth engines in e-commerce and digital finance.
- dLocal (LatAm/EM): dLocal achieved 52% year-on-year revenue growth by providing payment solutions that enable global merchants like Uber and Spotify to access emerging market consumers.
Investor takeaway: These are monopolistic regional champions, monetizing EM’s digital leapfrog.
3. India – Structural compounding machines
India GDP is expected to grow by +6.5% in 2025, with financial access improving steadily across the country but still leaving significant room for expansion.
- HDFC Bank: The bank continues to deliver ~15% loan growth year-on-year with a return on equity of around 16%, reflecting its dominant position in Indian retail banking.
- ICICI Bank: ICICI generates a return on equity above 17% and maintains net non-performing assets below 0.5%, underscoring its prudent risk management and consistent execution.
- Reliance Industries: Reliance’s consumer arms, Jio and Retail, now contribute more than 50% of EBITDA and are growing close to 20% year-on-year, adding secular growth drivers alongside its energy operations.
Investor takeaway : India’s combination of demographics, digitization, and stable institutions underpins consistent compounding.
4. Africa – Leapfrogging through fintech
- MTN Group (South Africa): MTN serves 291 million subscribers and 63 million active MoMo users, with fintech revenue rising 47% year-on-year. In the first half of 2025, the company delivered a 33% increase in net profit despite foreign exchange headwinds.
Investor takeaway: Africa is under-owned; MTN offers scale exposure to mobile data and payments.
5. Resources & income anchors
- Vale (Brazil): Vale produces about 300 million tonnes of iron ore annually, with additional exposure to copper and nickel, and offers an attractive dividend yield of around 8%.
- DBS (Singapore): DBS maintains a common equity tier one ratio of 14.5% and a dividend yield near 6%, standing out as Asia’s most liquid and resilient bank.
Investor takeaway: These provide ballast and cash flow to balance higher-beta names.
Key risks
- Policy and governance: Regulatory shifts in China remain a persistent risk for technology companies, and state-owned firms in several EMs can still prioritize national objectives over shareholder returns.
- U.S. dollar and rates: A stronger dollar or slower-than-expected Fed cuts could reduce capital flows into EMs and weaken local currencies.
- Currency volatility: Frequent devaluations of currencies such as the BRL, ZAR can erode investor returns when measured in U.S. dollars.
- Semiconductor and commodity cycles: Oversupply in memory chips or downturns in iron ore prices could lead to sharp earnings contractions.
- Geopolitics: Rising tensions in the Taiwan Strait or the re-emergence of trade wars could trigger broad EM sell-offs.
- Liquidity and crowding: ADRs like dLocal and MTN trade with thinner liquidity, while EM ETFs often concentrate flows into a few large names, amplifying volatility.
Bottom line
Emerging markets are not just diversification for diversification’s sake. They are central to AI infrastructure, home to the fastest-growing consumer bases, and offer access to frontier fintech and high dividends. These 15 stocks provide a strategic way to rebalance portfolios away from U.S. concentration and toward the global growth engines of the next decade.
