India boasts better evaluation scores in recent updates.
The global investment landscape is evolving, and emerging market equities and bonds are presenting attractive opportunities for investors in 2025. Up-and-coming commodity-exporting countries could benefit from rising copper prices and structurally growing demand, while opportunities arise in the megatrend of sustainability, as China is expected to become one of the largest markets for green energy and electric vehicles in the long run.
Equities
Emerging market ETFs with strong recent performance include China-focused ones such as the iShares MSCI China Small-Cap ETF (ECNS, +53.89% YTD), KraneShares Hang Seng TECH Index ETF (KTEC, +52.90%), and the KraneShares All China Health Care Index ETF (KURE, +47.81%), reflecting strong tech and consumer health sectors in China. South Korea and Taiwan equities often benefit from technology and manufacturing sectors, which are growth drivers in these markets recognised for their industrial and technological prowess. India represents a fast-growing emerging market economy with rapid industrialization and expanding consumer sectors, making it attractive for long-term equity growth. Commodity producers in emerging markets offer opportunities linked to global demand for raw materials, although specific ETFs or bond opportunities focused on commodity producers were not highlighted.
Bonds
Emerging market debt remains an important asset class, with ongoing updates indicating evolving views on EM currencies and the US dollar — factors crucial for bond investors due to currency risk and interest rate impacts. Currency headwinds that previously challenged EM equities have diminished in 2025, improving the outlook for both equities and bonds in emerging markets. Investors are advised to conduct thorough country-specific and sector-specific research, evaluate political and macroeconomic risks, and consider hedging strategies to manage currency and regulatory risks in EM bonds.
Investment Approach Highlights
To capitalise on these opportunities, investors can utilise ETFs or mutual funds for diversified exposure to emerging markets. Select markets and sectors based on GDP growth, inflation, political stability, demographics, technology, and consumer trends. Continuous monitoring of macroeconomic, geopolitical, and regulatory changes is critical to adjusting portfolio allocations. Currency diversification inherent in international investing can mitigate some risks and enhance returns, especially when investing across multiple EM countries including Taiwan, South Korea, China, and India.
In conclusion, the outlook for emerging market equities and bonds in these regions appears positive in 2025, with strong sector growth in technology and healthcare in China, robust economic growth in India, and improving macroeconomic conditions reducing prior currency risks. Diversified ETFs remain a practical vehicle for accessing these opportunities while managing risks.
The finance sector might see investors moving towards China-focused equities, as evidenced by the strong performance of ETFs like the iShares MSCI China Small-Cap ETF, KraneShares Hang Seng TECH Index ETF, and KraneShares All China Health Care Index ETF. In the realm of bonds, emerging market debt continues to be an important asset class, with improvements in currency conditions potentially making it attractive for both equities and bonds.
