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, South Korea, Taiwan and Indonesia.

You might be surprised that some of these countries are considered emerging markets, but the term isn't concerned with the size of a country's economy. Rather, it refers to 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 reduce portfolio reliance on the US, Europe and Australia. It's worth noting that emerging markets stocks tend to be concentrated in specific sectors, including financials 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 have 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.

A defining feature of the emerging markets landscape in 2026 is the extraordinary dominance of the AI and semiconductor theme. Taiwan Semiconductor Manufacturing now constitutes a larger share of the MSCI Emerging Markets Index than all the stocks in India combined, and is reportedly held by around 92% of global equity funds, making it more widely owned than any single US stock. South Korean chipmakers Samsung and SK hynix have rallied hard on AI memory demand, while Chinese giants like Alibaba and Tencent have delivered comparatively modest gains. This concentration is worth understanding, as it means a broad emerging markets position is now, to a significant degree, a bet on the AI hardware supply chain.

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 without subjecting the whole pot to elevated risk.

How to invest in emerging markets stocks with us

To invest in emerging markets stocks, learn more about the sector, open a share dealing account or download the IG Invest app, search for emerging markets stocks or ETFs on our platform, choose how many shares you'd like to buy, and place your deal.

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 results of an index composed of large and mid-capitalisation emerging market equities. It has an expense ratio of 0.72% and around $29.8 billion in net assets. For more on ETF investing, see our best global ETFs guide.

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Top emerging markets stocks to watch

These are ten of the largest holdings of the iShares MSCI Emerging Markets ETF as of mid-2026. Note that the composition reflects the AI-driven surge in semiconductor names, with SK hynix having climbed into the top holdings.

Taiwan Semiconductor Manufacturing (TPE: 2330)

Taiwan Semiconductor Manufacturing Company, often known by the initialism TSMC, is the world's largest and most advanced semiconductor manufacturer, producing chips for market leaders including Apple and Nvidia. It's a key player in the semiconductor supply chain and manufactures around 90% of the most advanced computer chips in the world. It now represents roughly 13-15% of the entire MSCI Emerging Markets Index, a remarkable concentration for a single stock.

It 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 faces high geopolitical risk given tensions between China and Taiwan, and its business is capital-intensive, requiring billions in R&D and manufacturing investment.

Samsung Electronics (KRX: 005930)

Samsung is a South Korean multinational known for smartphones, memory chips and consumer electronics. It's one of the world's largest manufacturers of memory semiconductors, which are crucial for data centres and AI development, and its shares rallied strongly through 2025 and into 2026 on surging AI-related chip demand.

Samsung competes with Apple in the premium smartphone segment and benefits from a strong global brand, technological innovation and diversification across product categories. However, it faces intense competition from Apple and from Chinese phone manufacturers with a lower cost base.

SK hynix (KRX: 000660)

SK hynix has become one of the standout emerging markets stories of 2026, climbing into the top holdings of major emerging markets indices on the back of soaring demand for high-bandwidth memory (HBM) chips, which are essential components in AI accelerators. The South Korean chipmaker is a critical supplier to the AI hardware supply chain, and alongside Samsung has been a primary beneficiary of the AI memory boom.

The company benefits from its leadership position in HBM, where it has been a key supplier to leading AI chip designers. The risks are those common to the memory sector: it is highly cyclical, capital-intensive, and exposed to the risk that AI-related demand cools or that competitors close the technology gap.

Tencent (HKEX: 700)

Tencent is a Chinese platform company 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, and operates several high-profile video games, including PUBG Mobile.

The company is expanding its fintech offering through WeChat Pay and competes in cloud computing with Alibaba Cloud. However, Tencent faces regulatory scrutiny from the Chinese government, and global expansion remains tricky due to Sino-US geopolitical tensions and competition from Western big tech. Like other Chinese giants, its share price gains have been comparatively modest against the surging Korean and Taiwanese chipmakers.

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 competing fiercely with Amazon Web Services in cloud.

The company benefits from strong brand recognition, economies of scale and continued growth in digital payments through Alipay, owned by affiliate Ant Group. However, Alibaba has struggled with regulatory crackdowns in China, a slowdown in consumer spending, and competition from rivals like JD.com and PDD Holdings. It has also been working to establish itself as a credible player in AI, an area where Chinese firms have lagged their Korean and Taiwanese counterparts.

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 delivery and ride-hailing. Meituan benefits from a strong interconnected network and a massive user base that 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. It has also expanded into electric vehicles, a significant new growth avenue.

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 from Apple, Samsung and fellow Chinese rivals.

PDD Holdings (NASDAQ: PDD)

PDD Holdings is best known for subsidiaries Pinduoduo and Temu. It's a fast-growing Chinese e-commerce company that specialises in discounts and group-buying deals, and has gained significant traction by offering low-cost goods through social commerce, with a focus on gamification and bulk discounts to drive engagement.

The company faces profitability concerns due to its aggressive discounting strategy, increasing regulatory scrutiny in China, and Western concerns about Temu over data privacy issues.

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 banking services, including loans, credit cards and corporate banking, with a focus on digital banking growth. The bank is growing fast due to India's expanding middle class.

However, it operates in a highly regulated environment, faces significant 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.

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, as well as green hydrogen and solar energy projects.

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

Emerging markets stocks summed up

• Emerging markets stocks represent shares of companies based in developing economies such as China, Taiwan, South Korea, India and Brazil
• They often come with significant growth potential, but tend to be subject to greater political, regulatory and currency risk
• The 2026 landscape is dominated by the AI and semiconductor theme, with TSMC, SK hynix and Samsung rallying hard while Chinese giants have lagged
• They often trade at a discount compared to developed markets and allow for a decent level of diversification, typically as a smaller part of a broader portfolio

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invest.

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