Emerging Market Equities: AI, China, and India in Focus

Emerging market equities surprised to the upside in 2025, with strong returns supported by resilient growth, easier financial conditions, and a weaker dollar. Looking ahead, AI-linked supply chains in Korea and Taiwan, China’s innovation-led export reorientation, and India’s improving earnings outlook create differentiated opportunities across the EM landscape. Valuations remain compelling overall, with EM equities trading at a notable discount to US markets despite conservative positioning.

At the same time, advisors must navigate risks tied to trade tensions, geopolitical uncertainty in Asia, and ongoing domestic challenges in China and India. In this environment, active management and selective stock picking appear critical to capturing alpha from under-researched companies while managing dispersion across countries and sectors.