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Market Outlook

Q3 Emerging Markets (Core) Outlook

Outlook
12 October 2026

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Latest Emerging Markets (Core) economic and market outlook. 

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A pullback in the Asian technology space was increasingly likely, given the magnitude of previous gains. However, we believe it was largely due to technicals and positioning rather than a change in the underlying fundamentals. Demand across the North Asian technology hardware ecosystem remains extremely strong. On a recent research trip to Korea and China, we found no evidence of a slowdown in the underlying appetite for compute and other datacentre components. Instead, the buildout continues to encounter bottlenecks in memory, substrates, power and advanced packaging. Our portfolio remains positioned in these areas of constraint. On our estimates, the major Korean memory producers could generate cash equivalent to 70-90% of their current market capitalisation over the next three years. Greater clarity on how this capital will be returned to shareholders could provide an important catalyst during Q4.

Gold remains another key theme in the portfolio. More hawkish interest rate expectations represent a short-term headwind, and we have taken some profits accordingly. However, the structural drivers of our positive view remain intact, including developed market fiscal deterioration, concerns over currency debasement and continued central-bank buying, particularly in emerging markets. Our preference remains for miners that combine leverage to the gold price with visible production growth and free cash flow inflection points.

We went into the first round of Brazil’s presidential election modestly overweight, believing that the risk/reward was favourably balanced. In the event, Flavio Bolsonaro took a commanding lead over Lula. A Bolsonaro victory in the run-off on 25th October should reduce the political risk premium in Brazil, given the possibility of tighter fiscal policy and reforms that could lift growth. Material gains in Congress for the PL party and other right/centre-right parties are also critical changes in the political landscape in Brazil that are positive for markets in the immediate term. With an improving risk/reward, we have therefore built a larger overweight, adding slightly to existing Financials and Utilities positions, and initiating a position in a car rental company. Outperformance of existing names has further increased our overweight. We also rotated some capital within Utilities, and from a long-term holding to more discounted alternatives that are more sensitive to a reduction in risk premia.

Overall, we remain constructive on the outlook for EM equities, but we have reduced portfolio risk, primarily due to rising global bond yields. Whilst higher nominal and real yields partly reflect continued strength in the US economy, they increase the cost of capital and could eventually weigh on risk appetite, particularly for longer-duration growth stocks.

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).

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