OpenClose

Market Outlook

Emerging Markets (Core) Outlook

Outlook
14 July 2025

By &

Latest Emerging Markets (Core) economic and market outlook. 

clock

We believe the US Dollar is still historically overvalued, even after the post-“Liberation Day” sell-off, standing at around two standard deviations above its historical average. We also see the US fiscal situation as unsustainable; the US needs to tighten its belt more than any other major economy. Meanwhile, the explosive growth in shale oil that benefited the US so materially in the recent past is unlikely to be repeated. For all these reasons, we expect US exceptionalism to fade, resulting in a weaker trade-weighted dollar and a rotation of capital out of crowded US assets. EM equities should be amongst the biggest beneficiaries of this, with relative valuations extremely attractive and a weaker dollar providing scope for central banks to spur growth by cutting rates. This leaves us very optimistic on the asset class moving into the second half of 2025.

We believe recent weakness in Argentina is unjustified. Fundamentals continue to improve, with inflation slowing in May to 1.5% month-on-month, the currency remaining steady, and the central bank rebuilding reserves. GDP is growing at over 6% year-on-year, partly driven by rapid credit growth of around 50% in real terms. Upcoming mid-term elections will test sentiment, but polling suggests that Milei’s government could secure a blocking majority, underpinning policy continuity.

Meanwhile in Asia, Korea’s reform-minded administration is expected to push market-friendly Commercial Act revisions with the goal of unlocking value for shareholders and driving the Kospi to 5000. We continue to have exposure to discounted holding companies and semiconductor plays. Similarly in Taiwan, we have substantial exposure to AI hardware leaders such as Delta Electronics. In India we note clean corporate balance sheets, a rebounding property cycle, rising government capex and a pro-growth RBI, all of which underpin our domestic-demand plays, including Prestige Estates and Jio Financial Services.

Conversely, we remain underweight China as it continues to battle a number of structural headwinds, including a deflationary economy, property sector weakness, poor demographics and excess debt. Growth is largely progressing in line with government targets, meaning at this stage there seems to be limited appetite for stimulus.

Finally from a regional perspective, we retain exposure to banks in eastern Europe, which we believe offer high yields at attractive valuations.

From a sector standpoint, aside from the aforementioned semiconductor exposure, we maintain sizeable positions in copper and gold producers, including Capstone Copper, Zijin Mining and Eldorado Gold, given tight supply/demand dynamics and a softer dollar.

Important Information:

Nothing in this document constitutes or should be treated as investment advice or an offer to buy or sell any security or other investment. TT is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA).

If you would like information on TT’s products, please contact:

Receive our insights

Sign up to receive regular investment updates and insight about products that interest you:

Sign up now