Chris Tennant, co-portfolio manager of Fidelity Emerging Markets, names three lesser-known companies.
At Fidelity Emerging Markets, we take a flexible approach to selecting emerging-market stocks. We can invest across the entire universe, from large companies to small-cap and off-benchmark names, while using both long and short positions. When conviction is high, gearing lets us increase selected long positions.
We choose emerging-market stocks for their fundamentals and quality. The aim is to buy companies capable of producing higher returns over time, backed by sound governance and balance sheets that are not carrying excessive debt. On the short side, we target the reverse: businesses facing structural or cyclical decline, with warning signs already showing. Fidelity's analysts help us find these opportunities across emerging markets, including lesser-known companies that receive little attention. Three holdings illustrate the approach.
Emerging market stocks to watch
Korean beauty products, or "K-beauty," have surged worldwide as shoppers respond to new formulas and quickly shifting trends. Many of the brands consumers recognize rely on less visible specialist suppliers behind the scenes. One of them is Cosmecca Korea (Seoul: 241710), which develops and manufactures skincare products for other companies. Korea's third-largest manufacturer in this field, Cosmecca has room to benefit as demand for Korean cosmetics stays strong. Its size helps hold down production costs and leaves more money for research and new products, giving the company an edge in areas such as sunscreen. That expertise is drawing more US brands alongside its Korean customers.
Think of Sinotruk (Hong Kong: 3808) as China's answer to Volvo Trucks or Scania: a major heavy-duty truck maker with a strong hold on its home market. The bigger investment angle lies overseas. The company now sells in more than 150 countries, carrying China's manufacturing capacity into emerging markets where demand for trucks continues to grow. Africa stands out, with rising mining activity and infrastructure spending supporting sales. Sinotruk also protects its market position with a broad service network, giving it an advantage over competitors.
Tin may not be the first metal associated with the AI boom, yet demand is rising as AI servers, semiconductors, and solar panels require more of it. Supply was already tight, and stricter regulations combined with low inventories have made the shortfall worse. That leaves tin as a growing constraint for technology manufacturers. We get exposure through Alphamin (Vancouver: AFM), a small-cap, off-benchmark producer based in the Democratic Republic of Congo. Alphamin operates two of the world's highest-grade tin mines and produces about 7% of mined tin worldwide, giving it a strong position in the market. Its assets are high quality, production costs are low, and the shares trade at a very cheap multiple.
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