Emerging Markets Insights: Looking Beyond Energy Prices

Emerging market equities were mixed in June as volatility in the AI trade and geopolitical uncertainty offset some relief from falling oil prices. Lower energy costs should support growth, especially in lower-income emerging markets, while Asia may benefit from the shift toward semiconductor makers as investors rotate away from hyperscalers.

Valuations in chip stocks remain elevated, but strong demand and sold-out capacity through 2027 suggest earnings risk is still limited. Corporate governance reforms in Malaysia, South Korea, and Singapore could improve shareholder returns over time, though Malaysia’s effort may have less immediate market impact without new capital commitments.

Outside Asia, Latin America remains strategically important because of its copper, lithium, and rare earth reserves tied to the global energy transition.