Emerging markets investing has been, for many international investors, a story of unrealised promise. The MSCI Emerging Markets Index underperformed developed markets significantly in the decade to 2024, weighed down by China's regulatory crackdowns, commodity cycles, and currency volatility. Yet the structural argument for EM exposure remains compelling — and the differentiation within the EM universe has never been more important to understand.
In 2026, the relevant question is not "should I invest in emerging markets?" but "which emerging markets, accessed how, and with what time horizon?" The answers vary considerably depending on the economy in question. This article assesses the key economies and the investment considerations for internationally mobile HNW investors.
Why the Emerging Market Universe Has Changed
Twenty years ago, "emerging markets" was almost synonymous with the BRICS (Brazil, Russia, India, China, South Africa). Today, that framing is obsolete. Russia is uninvestable for Western investors following sanctions. China's investability is contested for both regulatory and geopolitical reasons. Brazil continues to deliver volatility with mediocre long-term returns for foreign investors. India and South Africa are diverging sharply in their trajectories.
Meanwhile, economies that received little attention a decade ago — Vietnam, Indonesia, Saudi Arabia, the UAE, Mexico, and parts of East Africa — are emerging as the more interesting investment destinations. The EM universe must now be navigated with far more granularity than index-weight approaches allow.
India — The Structural Frontrunner
India stands out as the most compelling long-term emerging market story as of 2026. Its advantages are multiple and self-reinforcing:
Demographics: With the world's largest population, a median age of approximately 28, and tens of millions of young workers entering the formal economy each year, India's labour force growth will drive economic expansion for decades.
GDP growth: India has been growing at 6–8% annually, making it one of the world's fastest-growing major economies. It recently overtook Japan and Germany to become the world's fourth-largest economy by nominal GDP, and is on track for third within the decade.
Improving governance and infrastructure: The Modi government's focus on infrastructure — highways, railways, ports, digital infrastructure, smart cities — is gradually addressing the bottlenecks that historically constrained India's growth.
Digital sophistication: India's Unified Payments Interface (UPI) is among the world's most advanced real-time payments systems. India is a major global force in software services and is developing significant AI capability.
Political stability: While India is a complex democracy with real governance challenges, it offers far more political stability and rule of law than many EM peers.
The risk factors for Indian investment include elevated equity valuations (Indian equities trade at a premium to broader EM on most metrics, reflecting the market's recognition of the growth story), currency volatility, bureaucratic complexity, and inflation risk. Investors should approach India with a long-term (5–10 year) horizon.
India is accessible through Indian equity funds, ETFs tracking the Nifty 50 or BSE Sensex, active managers with specialist India expertise, or private equity vehicles investing in Indian companies. The India market is large and liquid enough for meaningful portfolio allocation.
South-East Asia — A Diversified Growth Belt
South-East Asia is home to over 650 million people across ten countries in ASEAN, each at different stages of economic development. For investors, the most interesting economies are:
Vietnam: One of the biggest beneficiaries of supply chain diversification away from China, Vietnam has attracted enormous foreign direct investment in electronics, textile, and consumer goods manufacturing. GDP growth has averaged 6–7% over the past decade. The Vietnamese equity market (Ho Chi Minh Stock Exchange) is less liquid and transparent than other Asian markets, but several specialist funds provide access.
Indonesia: The world's fourth-largest population, rich natural resources (nickel, coal, palm oil), improving infrastructure, and a growing middle class make Indonesia a compelling long-term story. Jakarta has reformed significantly and is increasingly foreign-investment friendly. Indonesian equities are accessible through the Jakarta Stock Exchange or EM funds.
Philippines: Strong demographic profile, large English-speaking workforce, significant remittance income, and growing services sector. The Philippines is a major centre for business process outsourcing.
Thailand: A more mature EM economy with established manufacturing (automotive, electronics), strong tourism, and improving digital economy. Political volatility remains a risk.
South-East Asia as a whole benefits from being a natural "swing" region in the US-China decoupling: geography and diplomacy allow several ASEAN nations to trade actively with both superpowers while attracting investment from each.
The Middle East — State Capital as Investment Engine
The Gulf Cooperation Council (GCC) economies — Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman — are undergoing a historic economic transformation driven by sovereign wealth funds, Vision 2030 strategies, and deliberate economic diversification away from hydrocarbons.
Saudi Arabia: The world's largest sovereign wealth fund (Public Investment Fund), now investing over $700 billion in everything from technology to sports franchises, infrastructure, and domestic diversification. Saudi Aramco, one of the world's most profitable companies, listed on the Saudi exchange (Tadawul) in 2019. The Saudi market is now included in MSCI EM indices.
UAE: Dubai and Abu Dhabi have diversified well beyond oil, with thriving financial services, logistics, tourism, and technology sectors. The UAE's regulatory environment and tax framework make it attractive both as a business base and investment destination. UAE equities are accessible through dedicated GCC funds or ETFs.
For internationally mobile investors already based in the UAE or Gulf, domestic equity markets and real estate represent accessible local investment opportunities alongside global diversification.
Latin America — Selective Opportunities
Latin America remains a frustrating investment region characterised by political cycles, currency risk, and institutional volatility. But selective exposure is warranted:
Mexico: The near-shoring beneficiary is the most interesting LATAM investment story as of 2026. Manufacturing investment is surging. The Mexican peso has been a strong currency. The Mexican equity market (BMV) is accessible and includes world-class businesses in cement (CEMEX), beverages (Femsa), telecommunications (América Móvil), and banking.
Brazil: Latin America's largest economy offers deep equity markets (B3 exchange) and genuine global-scale businesses across commodities, banking, consumer goods, and technology. However, fiscal policy risk, currency volatility, and political unpredictability have made it a frustrating long-term investment for many foreign investors. Selective exposure through quality businesses with strong competitive positions may be worthwhile for patient investors.
Chile and Peru: Both are significant commodity producers (copper is central) and have generally more stable institutions than Brazil or Mexico. Exposure to copper thesis can be accessed through these markets.
What About China?
China cannot be ignored — it is the world's second-largest economy and the largest constituent of EM indices. But for international investors, China's investability in 2026 is genuinely contested.
The domestic regulatory environment is more interventionist and less predictable than a decade ago. Geopolitical tensions with the US — trade restrictions, technology sanctions, and potential escalation over Taiwan — create systemic tail risks. The property sector's structural difficulties (following the Evergrande crisis and ongoing developer defaults) have dragged on growth and consumer confidence.
Against this, China's equity market is cheap relative to history and relative to other EM peers. Chinese technology companies remain globally competitive. Domestic consumption is a genuinely large and growing market. The question for investors is whether the political and systemic risks are adequately compensated by the return premium.
Many advisers are recommending either deliberate underweighting of China relative to index weights, or "ex-China" EM strategies that retain the diversified EM exposure while removing the concentration risk. This is a reasonable approach for investors who are concerned about geopolitical scenarios.
Portfolio Approach: How to Access EM
For HNW investors, the options are:
Passive EM index funds/ETFs: Cheap, liquid, and diversified but include significant China and other concentrated exposures. Useful as a core holding.
Active EM managers: Can add value through country allocation (overweighting India, underweighting China, for example) and stock selection in less efficient markets. Manager selection is critical.
Single-country or regional specialists: India funds, Asia ex-China funds, GCC funds, LATAM funds — allow targeted expression of specific views.
Private equity in EM: Higher potential returns, significant additional risk and illiquidity. Suitable only for sophisticated investors with long time horizons and appropriate risk tolerance.
Currency considerations: EM investments often involve currency risk relative to the investor's base currency. Currency hedging is possible but costly and imperfect for EM currencies.
Emerging market investments carry significant risks including political instability, currency volatility, lower market liquidity, less robust regulatory environments, and economic policy risk. Values can fall sharply. Past performance is not a reliable indicator of future results. Investors should seek professional advice.
How Global Investments Can Help
Global Investments has guided internationally mobile HNW clients through multiple emerging market cycles across 32 years. Our advisers understand both the investment case and the specific structuring, currency, and tax considerations for EM exposure, particularly for clients who themselves live in or have strong ties to emerging market economies.
Contact us through globalinvestments.net to discuss how emerging market allocation should feature in your global investment strategy.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.