Determined Investors Can Find Opportunities in Emerging Markets

While recent market events have shaken investors around the world, those with the confidence to look to emerging markets while bracing through market fluctuations may be rewarded in the long term. In fact, the investment outlook for emerging market equities remains positive, and certain sectors and industries stand to benefit from current market dynamics, including financials, commodities and green energy companies.

Today’s market volatility – driven by inflation, COVID-19 management, the Ukraine-Russia crisis, and bottlenecks in global supply chains – has been challenging for all investors. And while investors will likely see challenges in the short term, our team believes that investing in companies in emerging markets with strong ESG credentials and high quality, sustainable growth will yield results over the long run.

Emerging market equities are trading at all-time lows relative to developed market equities. In addition, in 2022, we are seeing a pivot from growth toward value stocks. Specifically, lower valuation, cyclical companies are benefitting from the change in investor sentiment, and the broad equity market downturn is pushing emerging market valuations even lower. We expect some sectors and industries to benefit from the current macro environment while others will likely be challenged further.

Sectors Expected to Benefit


Financials stand to benefit from the current market backdrop of higher interest rates in the United States and emerging market economies. Year-to-date, financials are one of the strongest performing sectors in the MSCI Emerging Markets Index.

One factor that influences financials performance in emerging markets is that many of these economies remain heavily cash based, providing a unique opportunity for productivity improvement in financial services. Digitization can help provide financial services to underpenetrated areas, reducing costs and promoting greater financial inclusion across regions. Further, financial inclusion is recognized as vital for economic growth and social welfare and is one of the UN Sustainable Development Goals.