Opportunities and diversification in global emerging market equities

Emerging-market equities offer diversification and exposure to structural growth at materially lower valuations than developed-market stocks.

• Emerging and developing economies represent around 45% of global GDP, up from 25% in 2000, and generated approximately 60% of global economic growth over that period; China, India and Brazil were major contributors.
• The MSCI Emerging Markets Index trades at about 9.72 times forward earnings, versus 17.9 times for the MSCI World Index and 22.4 times for the Nasdaq, creating relatively inexpensive access to AI and robotics trends.
• Taiwan Semiconductor, Samsung Electronics and SK Hynix supply US AI hyperscalers including Amazon, Google and Microsoft, while Tencent and Alibaba provide exposure to China’s shift toward a more consumer-led economy.
• The opportunity comes with higher volatility, currency fluctuations, political instability, regulatory change and weaker legal protections; historical examples include crises in Southeast Asia in 1997, Brazil in 1999 and Argentina in 2001–02.
• Jupiter Origin typically holds 100–150 stocks and selects businesses with superior profitability and growth, durable advantages, attractive relative value, and positive earnings and share-price momentum.

Takeaway: Investors should consider emerging markets as a potentially attractive and diversifying complement to US-heavy benchmarks, but active diversification is important because performance is cyclical and the asset class carries significant political, regulatory and macroeconomic risks.