Best emerging markets stocks to watch

Emerging markets stocks in brief

Emerging markets stocks represent shares of companies based in ‘developing’ economies, including China, India, Brazil, South Africa and Indonesia.

You might be surprised that these countries are considered to be emerging markets, but the term is not concerned with the size of the country’s economy — but rather specific markers — including rapid GDP growth, relatively low income per capita compared to developed nations, a developing financial system, continuing industrialisation and elevated government influence in the markets.

Emerging markets stocks often come with significant growth potential, largely due to wider economic expansion and urbanisation, alongside younger demographics. They also tend to trade at a discount compared to developed markets and allow for a decent level of diversification — because they allow investors to reduce portfolio reliance on the US, Europe and Australia. It’s worth noting that emerging markets stocks also tend to be concentrated in specific sectors, including financial and technology, but most notably resources.

On the other hand, emerging markets stocks are subject to greater political risk including rapid policy shifts, financial problems or trade disputes. They also tend to sport lower liquidity and are exposed to currency volatility, including the capital issues associated with less developed financial markets. Perhaps most importantly, specific companies can struggle with corporate governance issues due to weaker regulation.

Overall, emerging markets stocks come with their own distinct set of advantages and drawbacks. They often compose a small part of a diversified portfolio in order to take advantage of the potentially lucrative growth but without subjecting the whole pot to elevated risk.

How to invest in emerging markets stocks with us

1. Learn more about emerging markets stocks
2. Download the IG Invest app or open a share dealing account online
3. Search for emerging markets stocks on our app or web platform
4. Choose how many shares you’d like to buy
5. Place your deal and monitor your investment

Investors look to grow their capital through share price returns and dividends - if paid.

But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.

We also offer many emerging markets-focused ETFs, including the popular iShares MSCI Emerging Markets ETF, which seeks to track the investment results of an index composed of more than 800 large and mid-capitalisation emerging market equities. It has an expense ratio of 0.72% and circa $16.4 billion in net assets in the fund.

Top emerging markets stocks to watch

These were the ten largest holdings of the iShares MSCI Emerging Markets ETF as of February 2025.

1. Taiwan Semiconductor Manufacturing (TPE: 2330)
2. Tencent (HKEX: 700)
3. Alibaba (HKEX: 9988)
4. Samsung (KRX: 005930)
5. HDFC Bank (NSE: HDFCBANK)
6. Meituan (HKEX: 3690)
7. Xiaomi (HKEX: 1810)
8. PDD Holdings (NASDAQ: PDD)
9. Reliance Industries (NSE: RELIANCE)
10. China Construction Bank (HKEX: 939)

Taiwan Semiconductor Manufacturing (TPE: 2330)

Taiwan Semiconductor Manufacturing Company — often known by initialism TSMC — is the world’s largest and most advanced semiconductor manufacturer, which produces for market leaders including Apple and, Nvidia. It’s a key player in the semiconductor supply chain, and manufacturers circa 90% of the most advance computer chips in the world.

It also drives advancements in AI, 5G, and high-performance computing — with a competitive edge over rivals like Intel and Samsung due to its advanced processing nodes. However, TSMC arguably faces high geopolitical risk given tensions with China. Additionally, its business is capital-intensive, requiring billions in R&D and manufacturing investments. It’s worth noting that the stock is comprises roughly a third of Taiwan’s stock market.

Tencent (HKEX: 700)

Tencent is a Chinese platform stock with dominant positions in social media, online gaming, cloud computing, and fintech. Most importantly, it owns WeChat, China’s most widely used messaging and payment platform, — but it also operates several high profile video games, including PUBG Mobile.

The company is expanding its fintech offering through WeChat Pay and is also competing in cloud computing with Alibaba Cloud. However, Tencent does face regulatory scrutiny from the Chinese government, which has imposed continually tighter restrictions on gaming, fintech, and data privacy. Additionally, global expansion remains tricky due to Sino-US geopolitical tensions and general competition from western big tech.

Alibaba (HKEX: 9988)

Alibaba is China’s largest e-commerce and cloud computing company, running platforms such as Taobao, Tmall, and Alibaba Cloud. Often called China’s Amazon, it dominates the Chinese online retail market and has built a vast logistics network through subsidiary Cainiao — while simultaneously engaging in a fierce battle for clients Amazon Web Services (AWS).

The company benefits from strong brand recognition, economies of scale, and continued growth in digital payments through Alipay — owned by affiliate, Ant Group. However, like Tencent, Alibaba has struggled with regulatory crackdowns in China, a slowdown in consumer spending, and competition from rivals like JD.com and Pinduoduo.

Samsung (KRX: 005930)

Samsung is a South Korean multinational corporation known for smartphones, memory chips, and large consumer electronics. It is the world’s largest manufacturer of memory semiconductors which are crucial for data centres and artificial intelligence development.

Samsung also competes with Apple in the premium smartphone segment — and benefits from a strong global brand, technological innovation, and diversification across multiple product categories. However, it faces intense competition not only form Apple, but also from Chinese phone manufacturers with a lower cost base.

HDFC Bank (NSE: HDFCBANK)

HDFC Bank is one of India’s largest private sector banks, known for its strong retail banking presence and technological innovation. It offers a wide range of classical banking services, including loans, credit cards, and corporate banking — but sports a focus on digital banking growth. The bank is growing fast due to India’s burgeoning middle class.

However, it operates in a highly regulated environment, faces massive competition from fintech startups and other private banks, and is vulnerable to any Indian or global economic downturn that may affect credit defaults and loan demand.

Meituan (HKEX: 3690)

Meituan is China’s leading online platform for food delivery, travel and local services. It’s the market leader in Chinese food delivery and has expanded into grocery deliveries and ride-hailing. Meituan benefits from a strong interconnected network and a massive user base which heavily favours the on-demand economy,.

However, the company faces regulatory challenges, high operational costs, and heavy competition, particularly with Alibaba-backed Ele.me. Profitability is a key concern due to the constant investment in infrastructure and R&D needed to remain the market leader.

Xiaomi (HKEX: 1810)

Xiaomi is a Chinese consumer electronics company best known for its affordable smartphones, as well as its extensive smart home ecosystem and AIoT devices. The company has a global presence, but is best-known in India and Southeast Asia, where it competes with Samsung and Apple in the budget and mid-range smartphone markets.

Xiaomi’s strength lies in its cost-efficient supply chain, brand loyalty, and ecosystem of interconnected devices. However, its profit margins are relatively low due to its budget to mid-market strategy, and it faces competition not only from Apple and Samsung but also from fellow Chinese rivals.

PDD Holdings (NASDAQ: PDD)

PDD Holdings is a lesser-known stock, but investors will know subsidiaries Pinduoduo and Temu. It’s a fast-growing Chinese e-commerce company that specialises in discounts and group-buying deals.

PDD has gained significant traction in China in the face of massive competition by offering low-cost goods through social commerce, with a controversial focus gamification and bulk discounts to drive engagement. The company also faces profitability concerns due to its aggressive discounting strategy, increasing regulatory scrutiny in China, and western concerns about Temu over data privacy issues.

Reliance Industries (NSE: RELIANCE)

Reliance Industries is by most metrics India’s largest conglomerate, with businesses spanning petrochemicals, telecommunications, retail and digital services. Its telecom arm, Jio, has revolutionised India’s mobile internet landscape, offering affordable data and expanding into 5G.

The company has also made significant investments in e-commerce through JioMart, in addition to significant spending in green hydrogen and solar energy projects.

Reliance benefits from overwhelming market dominance and strong government support but its high debt levels and exposure to volatile oil prices remain a concern.

China Construction Bank (HKEX: 939)

China Construction Bank is one of China’s ‘Big Four’ state-owned banks, providing corporate and retail banking services, infrastructure financing, and wealth management. It is famous for funding large-scale infrastructure projects backed by the ruling Communist party — and therefore enjoys strong capital reserves and a huge customer base.

However, like all Chinese companies, it faces risks related to China’s slowing economy, rising real estate sector worries, and government policies that may limit its profitability. Also, as a state-controlled entity, it enjoys less flexibility in decision-making compared to private-sector banks — and is perhaps most likely to be targeted by any future US actions.

Emerging markets stocks summed up

• Emerging markets stocks represent shares of companies based in developing economies
• They often come with significant growth potential for a variety of reasons
• Emerging markets stocks tend to be subject to greater political and regulatory risk
• They also often trade at a discount compared to developed markets, but allow for a decent level of diversification