Mike Sell, head of global emerging market equities at UK-headquartered Alquity Investment Management, shares his views on which emerging market countries and sectors are expected to thrive in 2025, and outlines top stock picks.

While the US market has received a lot of investor attention recently, Mike Sell at Alquity Investment Management is not advocating a sell-off of US equities. He believes that emerging markets also deserve an allocation, “Emerging market funds should focus on the beneficiaries of domestic structural growth,” he said at a recent media event. 

Despite concerns over rising tariffs under US President Donald Trump’s Presidency, Sell is optimistic about opportunities in some emerging markets this year. “Selectivity at both a country and sector level is critical,” he said.

Sell spoke just before Trump roiled global markets on Monday by announcing over the weekend he intended to hit Canada and Mexico with 25 per cent tariffs on imports, and impose a 10 per cent amount on China. He also left open the possibility of measures on exports from Europe. Ever since his election last November, there's been speculation that Trump would apply tariffs – he's been a long-time protectionist and critique of free trade. 

Minimal Mexico
Sell has minimal positions in Mexico due to its heavy exposure to the US market, with exports to the US accounting for 33 per cent of GDP. Sell has halted his position in Vietnam due to its export-driven economy and heavy exposure to the US.

Sell is also underweight in China, saying it’s an unpredictable and volatile market. He thinks that he has the right balance in his portfolios to avoid losses. On Brazil, Sell is underweight but finds Argentina and Eygpt interesting due to the recent reforms carried out in these nations. In Argentina, for example, bond yields and inflation have fallen sharply, and the economy has started to grow. Sell is positive about smaller emerging markets such as Greece, Saudi Arabia, the United Arab Emirates, Indonesia, Poland, the Philippines and South Africa, which he says are fast-growing countries and undervalued markets.

Turning to South Korean and Taiwan markets, sell favours these because they are tech driven and benefit from advances in artificial intelligence, regardless of US politics.

India
India is a top market for Sell – it’s attractive, fast growing, with strong structural growth themes such as travel, e-commerce and modern retail. Also, it has little exposure to the US, with exports to the US accounting for 2.7 per cent of Indian GDP.  

Although foreigners have recently taken money out of India, Sell believes that trend will start reversing, arguing that the pull back has been unjustified: “Interest rates will come down in February, growth will accelerate and there will be an increase in foreign inflows in the equity market.” 

Alguity’s India Fund
Alguity’s India Fund focuses on India’s dynamism and domestic growth, with 39 out of 42 holdings domestically focused, and relatively immune to US political influence. Top holdings include Lemontree Hotels as well as metro brands and GO Colors in the retail sector. They also include Prince, Polycab and Astral Pipes in India’s building sector and IndusInd Bank in the financial sector.

Alguity’s Future World Fund
Alguity’s Future World fund is a differentiated, attractively valued multi-cap portfolio, which is highly exposed to India, followed by China, Taiwan, South Korea and Saudi Arabia.

ESG criteria are also critical to the firm. Top holdings include Taiwan’s chip giant Taiwan Semiconductor Manufacturing Company (TSMC), China’s tech multinational Tencent, India’s tech multinational Infosys, India’s HDFC Bank and ICICI Bank and China’s online market-place Meituan-Dianping.

US-based investment manager Franklin Templeton is also positive about the outlook for Taiwan, South Korea and India in 2025, although US allocations will remain the cornerstone of most equity investors. See more commentary here.