As investors focus on US rate cuts and technology stocks, capital is starting to return to emerging markets for clear and practical reasons.
Earlier this year, another round of US-China trade tensions raised concerns. US tariffs increased prices on Chinese imports, but much of that cost was absorbed by American companies and consumers. Exporters in emerging markets were less affected than expected, which has helped trade volumes stabilise.
At the same time, the relationship between the US and China is shifting. It now looks more like negotiation between economic equals than an escalating conflict. China still controls critical materials used in technology and AI, such as rare earth metals, and that gives it leverage. Both sides have strong incentives to avoid further disruption. For emerging markets, this creates a more predictable trading environment, particularly for those tied to manufacturing supply chains.
Emerging market equities are trading at a 30% to 40% discount to US markets on a forward earnings basis. Steady domestic demand, more stable currencies, and better business efficiency are all contributing to stronger forecasts.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
