Engines of the future: why emerging markets matter

As with any investment, your capital is at risk.

The fact that emerging markets have outperformed developed markets in recent times will not have escaped the attention of our readers. While such relative performance might once have been dismissed as cyclical or temporary, there is growing evidence pointing to something more profound at work. Recent BRICS and Shanghai Cooperation Organisation (SCO) meetings underscored a truth we can no longer ignore: the world is becoming more multipolar. 

Emerging markets are not merely passengers in the global system but are asserting a louder voice in trade, investment, technology, and diplomacy. Their growing influence reflects not just scale, but also enduring, structural transformations – shifts in demographics, consumption, innovation, and economic governance – that are reshaping the balance of global growth. These changes are neither fleeting nor isolated but instead represent shifting sands which we expect to have significant implications for long-term investors.

The numbers tell the story. Emerging markets already account for more than half of global GDP on a purchasing-power basis, and in the past decade have driven nearly two-thirds of global growth. By 2030, Asia alone is expected to contribute more than 60 per cent of global growth, with China, India, and Southeast Asia leading the way. Consumer spending across emerging markets is projected to reach $30 trillion by the end of the decade, as growing middle classes demand better healthcare, financial services, and technology.

Crucially, this is not only about scale but also about innovation. Innovation is now global, and emerging markets are no longer simply suppliers of low-cost labour or commodities. They are building globally competitive companies across renewable energy, ecommerce, biotechnology, and financial technology, supported by world-class engineers, entrepreneurs, and scientists. Innovation ecosystems in Shenzhen, Bangalore and São Paulo demonstrate that intellectual and entrepreneurial dynamism is not the preserve of the developed world.

China now accounts for nearly half of all patent filings worldwide, while China and India together produce more STEM graduates annually than the US and Europe combined. Africa, meanwhile, has leapfrogged entire stages of development, with mobile payments representing a greater share of GDP than anywhere else. These are not isolated anecdotes but evidence of a structural shift: emerging markets are redefining industries, setting global standards, and offering investors exposure to growth stories not easily replicated elsewhere.

At the company level, emerging markets today offer a far richer opportunity set than ever before, with businesses that are both innovative and resilient. Firms such as MercadoLibre, Latin America’s dominant ecommerce and digital payments platform, are benefiting from rapid digital adoption and rising consumer spending. CATL in China has become the global leader in electric vehicle batteries, underpinned by the transition to cleaner energy and mobility.

Meanwhile, TSMC in Taiwan exemplifies the strength of Asia’s semiconductor industry, providing the advanced chips that power global AI hardware, an area where the region has established clear global leadership. First Quantum Minerals is positioned to supply the copper essential to electrification and infrastructure build-out, while Sea Ltd in Southeast Asia has scaled across gaming, ecommerce, and digital finance, reflecting the region’s leapfrogging into the digital economy. 

These companies exemplify how structural trends – urbanisation, the energy transition, technological diffusion, and the growth of middle-class consumption – are enabling emerging markets to create world-class enterprises that can thrive on the global stage.

For long-term investors, this changing world order offers new avenues for diversification and return generation. Accessing growth where it is strongest can help strengthen portfolios over decades. At the same time, we must acknowledge the risks: governance standards remain uneven, currencies can be volatile, and political tensions between blocs like BRICS and the West can add uncertainty to global flows of trade and capital.

This is not a zero-sum story. Established economic powers will remain central pillars of global commerce and financial markets for decades to come. However, the broadening of global economic influence requires investors to acknowledge and engage with a more complex, multipolar reality. In doing so, we must stay attuned to both the opportunities in innovation and growth and the risks inherent in shifting political and economic alignments. This is what makes emerging markets both interesting and exciting.

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The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

This communication was produced and approved in September 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

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