By Nigam Arora
No worries if you missed out on huge profits in 2025. There are significant opportunities ahead in global growth.
Take a look at these moves in 2025:
- Korea ETF up 82%
- Africa ETF up 64%
- South Africa ETF up 64%
- Vietnam ETF up 60%
Importance Of Diversification Beyond The AI Trade
The AI trade is creating great opportunity, but there is a risk to the U.S. dollar from $38T in national debt and reckless spending by the U.S. government. Prudent investors are diversifying where growth is – outside the U.S.
Emerging markets have quietly gone from ignored to global equity leadership.
So far in 2025, broad emerging markets have outperformed developed markets and even the S&P 500, helped by easing inflation, policy shifts in key countries, and a rebound from deeply depressed valuations.
At the same time, the global AI build out, supply chain rewiring away from China, and the beginning of a global rate cut cycle are reshaping which emerging economies deserve fresh capital and which should be treated with caution.
The Arora Report has updated its ratings and buy zones on ETFs representing 16 key emerging economies.
Emerging Markets Are No Longer A Sideshow
For years, U.S. mega cap tech stocks dominated global returns. Today, the story is broader:
- Long-term projections show emerging markets driving about two-thirds of global growth through 2035.
- The Asian Development Bank raised growth forecasts for developing Asia, citing strong demand from high tech economies and faster than expected growth in India and parts of Southeast Asia.
In other words, we are moving deeper into a decade where emerging markets are not just a diversifier – they are central to where growth and innovation are happening.
Four Big Shifts
There are four structural shifts:
- AI And Data Center Supply Chains – The AI boom is not just about U.S. hyperscalers. Chip fabrication, packaging, and data-center build outs are anchoring growth in Taiwan, South Korea, India, and parts of Southeast Asia. Countries with the right mix of tech talent, power capacity, and regulatory stability are set to benefit.
- China-Plus-One and Nearshoring – Corporations are diversifying away from single country exposure to China. Capital and factories are flowing to Vietnam, Mexico, India, and ASEAN economies, with Vietnam and Mexico in particular seeing strong manufacturing FDI and nearshoring tailwinds.
- Domestic Demand Powerhouses – Economies like India, Brazil, Indonesia, and South Africa are less tied to export cycles and more to internal consumption and services. India, for example, combines high growth with a recent valuation reset that has brought its market closer in line with the U.S. on forward P/E.
- Policy and Reform Divergence – Some emerging economies are executing credible reforms and attracting capital. Others are stuck in old cycles of inflation, poor governance, or currency stress.
Why Emerging Markets Matter Now
Several forces are aligning at the same time:
- Rate cuts are easing pressure on emerging market currencies and funding costs.
- AI and tech demand are boosting exports and investment into select emerging market hubs.
- Long term growth remains significantly higher than in developed markets, and emerging market equities are still nowhere near the valuation extremes seen in past bubbles.
Flows into emerging markets remain inconsistent and sentiment is still fragile. That is often when disciplined investors can build positions before the next wave of hot money arrives.
We are confident that using our disciplined global framework can help you generate significantly more wealth over your investing lifetime than relying on conventional, rearview mirror approaches.
If you are serious about navigating this AI driven, rate cut world with an edge, start a 30 day free trial to ZYX Emerging by The Arora Report.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
