Emerging-market investing means buying shares of companies based in developing nations that have fast-growing economies. As technology and prosperity spread across the globe, markets like China, India, Brazil and South America are modernizing quickly and their middle classes expanding rapidly. The same is true for many smaller emerging-market countries in Asia, Africa, Latin America and Eastern Europe.
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Emerging-market countries feature rapid growth and widespread industrialization. Governments in these regions are busy building new civil and industrial infrastructure and improving health care and education facilities. At the same time, private investors are implementing modern technologies and working hard to expand into new markets. Faster economic growth can mean greater potential for higher returns from emerging-market stocks as compared to mature companies in developed nations.
The increased opportunity inherent in emerging-market stocks, however, comes with higher risk and greater volatility. Developing nations tend to have less regulatory oversight and are more prone to disruptive events like political instability, social unrest and currency devaluation. These risks are real but shouldn’t discourage smart investors who allocate capital as part of a well-thought-out, diversified portfolio.
For investors who understand and can accept the risks, emerging markets can be very rewarding. They present an excellent opportunity for capital appreciation while enhancing portfolio diversification across different regions of the world. Proper research is critical, and it’s best to have a long-term investment horizon, but buying stocks in these dynamic markets can be a profitable and exciting way to invest.
If you are interested in emerging-market stock investing, check out this list of six of the best stocks in the asset class:
| Stock | Market | Market Capitalization |
| JD.com Inc. (ticker: JD) | China | $56 billion |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | Taiwan | $975 billion |
| ICICI Bank Ltd. (IBN) | India | $105 billion |
| Corporación América Airports SA (CAAP) | Latin America | $3 billion |
| Vale SA (VALE) | Brazil | $43 billion |
| Alibaba Group Holding Ltd. (BABA) | China | $222 billion |
JD.com Inc. (JD)
JD is a $56 billion e-commerce and technology company. The company is based in China and is focused on growing its profitability by improving the productivity of the industrial supply chain in China and Southeast Asia. Its corporate mission is to be able to quickly and efficiently deliver all manner of physical products along with advanced digital technology solutions to consumers and businesses in the regions they serve.
Investors should think of JD as a sophisticated online retailer that also operates a modern logistics network of data centers, warehouses, ports, rail stations and trucking terminals. It sells and delivers its own products but also facilitates the e-commerce activities of thousands of third-party retailers.
Encouraged by the success of Amazon.com Inc. (AMZN), JD launched its online retail operations in 2004, but it’s more than a copycat operation. JD has put its unique stamp on the e-commerce and logistics industry by committing to innovation and tailoring its services to the tastes and expectations of the Chinese and Asian markets.
The stock features an annual dividend of 76 cents, which equates to a yield of 2.1%.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Based in Hsinchu City, Taiwan, TSM is a $975 billion global leader in the semiconductor and integrated circuits industry. Based on its location and the fact that many of its customers are in developing nations in the Middle East, Asia, Eastern Europe and Africa, TSM qualifies as an emerging-market stock but, make no mistake, this is a high-quality, well-run company with an established track record of success.
The company engineers and manufactures microchips that are used in some of the most sophisticated computer systems and electronic devices on earth. In addition, it is a manufacturing partner to many other tech companies that design chips but don’t have the capacity to produce them as fast as demand dictates. That includes the artificial intelligence chip developer, Nvidia Corp. (NVDA).
Wall Street consensus earnings estimates call for $2.85 a share for 2025 and $4.12 a share for 2026. That’s projected earnings growth of 44%.
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ICICI Bank Ltd. (IBN)
ICICI Bank has its headquarters in Mumbai, India. With a market cap of $105 billion, ICICI is one of the largest banking institutions in that emerging-market country. It is consistently ranked among the top banks in assets and number of active customers.
ICICI offers a wide range of deposit, credit and lending services to millions of individuals and businesses in the communities it serves. It also provides investment and wealth management services to high-net-worth individuals.
In addition to being an important part of India’s financial infrastructure, ICICI has branch offices in the U.S., the U.K., Canada and several other developed and developing nations.
The stock trades as an American depositary receipt, or ADR, on the New York Stock Exchange, but it has its primary listing on the Bombay Stock Exchange, where it trades as ICICIBANK.
Corporación América Airports SA (CAAP)
Corporación América Airports has a market cap of $3 billion. This company, through an extensive network of subsidiaries and partners, is one of the largest private airport operators in the world. It operates more than 50 airports in the emerging-market countries of Brazil, Argentina, Uruguay and Armenia, as well as several other developing countries.
Air travel demand has rebounded strongly since the end of the COVID-19 pandemic and is expected to remain strong for at least the next few years, even in emerging-market regions. CAAP is expected to continue to benefit from this trend and from the rapid expansion of the middle class in Latin America and around the world.
To the company’s credit, CAAP has invested heavily in advanced technology over the past decade. The goal is to improve the experience of air travelers and to increase its own productivity. Its success in this modernization effort has allowed them to retain existing customers and win new airport concessions when they come up for bid. The company is well positioned to take advantage of the growth of international air travel.
Vale SA (VALE)
Vale is an 82-year-old mining and metals firm based in Rio de Janeiro, Brazil. VALE boasts a market cap of over $44 billion and is a premier producer of iron ore and nickel. The company also produces significant amounts of copper, manganese, coal and ferroalloys, which are alloys used in the production of industrial-strength iron.
Iron is a major component in the production of steel, which is very important to the ongoing development of both emerging and developed nations. Nickel is an ingredient in stainless steel and is a critical material in manufacturing automobile and other high-capacity batteries. Both of these metals are expected to remain in high demand as world economies grow. This, of course, bodes well for Vale.
Industrial metals are the main source of revenue for Vale, but the company owns the mineral rights to several gold, silver and platinum mines.
Vale currently pays an annual dividend of $1.78 a share. Based on the stock’s Nov. 12 closing price per share of $9.97, that equates to a yield of 17.9%.
Alibaba Group Holding Ltd. (BABA)
Alibaba is a Chinese company with a multinational presence throughout the Asia-Pacific region. The firm is organized as a conglomerate with holdings in the e-commerce sector and the information technology sector.
The company’s online retailing operations include Alibaba.com, Taobao and Tmall. Americans may not know much about these e-commerce sites but, rest assured, they are each very popular with the emerging middle class in China.
On the tech front, Alibaba owns Alipay, which is a leading and fast-growing digital payments application in China. It also owns a digital entertainment company and a cloud computing infrastructure firm, and it is active in AI technology.
In short, Alibaba is a diversified tech and retail giant that is well positioned to take advantage of the continued economic development in China and Asia. The stock has a current dividend yield of 2.2%.
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6 of the Best Emerging-Market Stocks to Buy Right Now originally appeared on usnews.com
Update 11/13/24: This story was previously published at an earlier date and has been updated with new information.
