Opportunity May Be Knocking for Emerging Markets

Some investors would likely agree that emerging markets and emerging market equities haven’t exactly been the most popular investments this year. 

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That being said, portfolios can often greatly benefit from exposure to the sector. Namely, emerging markets can help traders and investors keep their equity portfolio more diversified. 

As an added benefit, things may very well be looking up for emerging markets in the new year. Recently, institutional investors weighed in on this during the Natixis 2025 Institutional Outlook Survey. 

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This survey from Natixis was chock full of interesting insights. To start, 53% of institutional investors asserted that emerging markets are “poised to take off in 2025.”

Going even further, 75% of respondents noted that easing monetary policy will help emerging market growth expand faster. 

However, some concerns do remain in the field for emerging markets. Besides the risks of U.S. policy and dollar strength, many institutional investors remain wary of China. 

Concerns Over China

China certainly saw a relatively weak economic performance in 2024 compared to previous years. This was ballooned by weakness in the country’s real estate market and declines in consumer spending. 

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Institutional investors echoed significant trepidation in regard to China’s 2025 outlook. 53% of respondents argue that China’s malaise will continue next year. Meanwhile, 63% of institutional investors assert that India will soon surpass China as the top emerging market investment. 

With enthusiasm for China significantly more muted than normal, many institutional investors are looking beyond the country for opportunities in emerging markets. 62% of survey participants chose Asia ex-China as the best emerging market opportunity in 2025. 

This was followed by 34% showing enthusiasm for Latin America. Unfortunately, China was much farther down the list of best opportunities, with only 25% of respondents still believing the country has the best EM opportunities next year. 

Even if China sees a weaker performance in the near term, investors should consider playing the long game with emerging markets. Giving one’s portfolio a longer time horizon can give EM strategies a better runway to blossom. 

For more news, information, and analysis, visit the Portfolio Construction Channel.