"The leading equities in emerging markets will be determined by technology"

John Citron, the JPMorgan Emerging Markets Investment Trust's investment manager, explains his investment strategy

Due to their potential for quick growth, growing consumer wealth, and vibrant businesses, emerging markets frequently attract investors. Nevertheless, investing in these markets is difficult and necessitates carefully weighing the opportunities and challenges specific to each region. More than 1,300 businesses from 24 countries make up the MSCI Emerging Markets (EM) index, which includes both smaller niche businesses and major players in the global technology sector.

Now making up almost a quarter of the index, technology has become a dominant sector. The emerging market environment is changing as a result of the move away from traditional industries like commodities and cyclicals and toward technology and tech-enabled services. Finding businesses that are ideally positioned to benefit from these developmentsespecially in the areas of artificial intelligence, digital services, and e-commercewill be crucial for investors hoping to secure sustained growth in emerging markets.

The two biggest markets, China and India, offer radically different investment environments. Despite the high prices of some of the best-performing stocks, India's stock market has been supported by robust economic growth and investor optimism.

Some of this overpriced inventory has decreased since the year began, indicating more worthwhile opportunities. However, China's economy is recovering more slowly. Consumer confidence is still low, and some industries are being impacted by regulatory uncertainty. A one-size-fits-all strategy for emerging markets is ineffective, as this divergence demonstrates.

As shown by the following three stock selections that highlight our strategic approach, active management is essential in spotting the best opportunities in this regard. We concentrate on businesses that have strong growth potential, sound fundamentals, and appealing valuations.

Driving AI development.

A key participant in the global technology supply chain, Taiwan Semiconductor Manufacturing Co. (Taipei: 2330) is the largest contract chipmaker in the world. It is essential to the digital economy because it is the leading manufacturer of advanced semiconductors, providing the chips that support 5G networks, high-performance computing, and AI development.

Next-generation mobile networks, cloud computing, and artificial intelligence have all increased demand for advanced semiconductors. With its market position and technological know-how, TSMC continues to be a significant player in this changing environment.

HDFC Bank (Mumbai: HDFCBANK), the biggest private-sector lender in India, stands out in one of the fastest-growing economies in the world. Having a large clientele and a significant presence in both corporate and retail lending, it has produced strong loan growth, high profitability, and a stable balance sheet. The growing demand for digital payments, consumer credit, and wealth management benefits HDFC Bank as financial services grow to accommodate India's expanding middle class. The company's focus on technological advancements, careful risk management, and market leadership make it an attractive long-term investment.

The largest fintech and e-commerce platform in Latin America, MercadoLibre (Nasdaq: MELI), is frequently likened to a conglomerate of Shopify, PayPal, and Amazon. Even though e-commerce is still not very common in the area, its online retail business is still expanding rapidly. More significantly, MercadoLibres' fintech division, MercadoPago, is revolutionizing financial services in areas with weak traditional banking infrastructure. In addition to facilitating online purchases, MercadoPago offers credit to underbanked groups, allowing millions of people to participate in the economy.