Singapore-based Chetan Sehgal, lead portfolio manager of Templeton Emerging Markets Investment Trust (TEMIT) and senior managing director of emerging markets equity at California-headquartered investment manager Franklin Templeton, explains why he is positive about the outlook for emerging markets in 2025, and outlines his top stock picks.

Despite increasing trade tensions between China and the US, Chetan Sehgal (pictured) at Franklin Templeton is positive about the outlook for emerging markets in 2025. He believes that these markets – driven by financials and high-tech firms – are still undervalued.

South Korea, where some of the world’s largest semiconductor companies are found, and Brazil markets have come back recently, Sehgal told this news service in an interview: “We are overweight in South Korea and Brazil and less underweight in China than we were.”

China
“We have added some Chinese names to our portfolio recently including manufacturer Weichai Power,” Sehgal continued. Chinese tech giant Alibaba share price is also up 40 per cent, he said, and it has become a Chinese artificial intelligence favourite among investors early in 2025.

Alibaba chairman Joe Tsai said last Thursday that the firm will partner with Apple on AI for iPhones sold in the China market, making the Hong Kong-listed shares of the tech giant surge higher. Chinese President Xi Jinping is also due to meet the tech giant’s co-founder Jack Ma.

Although US President Donald Trump’s administration recently put additional tariffs on Chinese imports, Sehgal believes that the situation is containable. A number of Chinese firms have learnt from the 2018 US/China trade conflict when Trump set tariffs and other trade barriers on China. Many firms have already moved their capacities to south-east Asia, Mexico and Europe, to avoid the high tariffs and to mitigate the impact. Latest forecasts also show that China’s economic growth in 2025 is expected to be around 4.5 per cent.

India
Despite being touted as one of the world’s largest and fastest-growing economies, Sehgal is underweight in India, as he believes that the market has been overvalued. But that is starting to change and he is planning to increase his exposure in India, saying that there are opportunities there.

Trade ties between the US and India have grown steadily in the past decade, with Washington increasingly viewing the subcontinent as a counterbalance to China’s growing regional influence. Indian Prime Minister Narendra Modi met Trump in February and the two said they would pursue a framework of greater cooperation. After the meeting, the US President announced a deal for Delhi to import more US oil and gas to shrink the trade deficit between the two sides.

Franklin Templeton’s Dina Ting highlighted that Modi is also negotiating trade deals with the United Arab Emirates, Australia and the European Free Trade Association (EFTA), and is in talks with the UK, Oman and the EU. “Some economists predict that India’s economy could see significant gains from these trade deals,” Ting said. She also believes that India’s efforts towards achieving financial inclusion and fintech innovation appear to be aiding its financial, consumer discretionary and technology industries.

TEMIT
Sehgal is the lead portfolio manager of TEMIT, an investment company listed on the London Stock Exchange, which provides access to the growth potential of firms from fast-growing economies with £2.07 billion ($2.605 billion) in total net assets such as China, Mexico, Taiwan, Korea and India. TEMIT embeds ESG considerations, best practice, and analytics into its investment processes.

Top 10 holdings include Taiwan Semiconductor Manufacturing Company (TSMC), the fund’s largest holding, as well as South Korea’s Samsung Electronics, the largest global producer of DRAM chips which has benefited from the price increase of DRAM and NAND flash memory chips – driven by demand for generative AI. Sehgal also invests in South Korean SK Hynix, the world’s second largest maker of memory chips and supplier of semiconductors.

Chinese tech giants Alibaba and Tencent are also in the top 10, as well as Taiwan-headquartered tech firm MediaTek. Other holdings include India’s ICICI Bank, HDFC Bank, and Swiggy, an Indian online food ordering and delivery company.

The trust has strong exposure to Asia and is heavily overweight in IT and financials. It has also shown positive performance over the last five-year period.