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Investing Ideas
Why 2025 might be the year for emerging markets
Growth, valuations, and other drivers could favor EM stocks in the coming year and beyond.
Key Takeaways
- Emerging markets (EM) may see a continuation of a relatively strong earnings trend in 2025, especially versus developed international markets.
- Near the end of 2024, emerging markets traded at one of the lowest forward price-to-earnings differentials relative to the S&P 500 index in the past 20 years.
- Several economic drivers in China that have hurt emerging-market equity returns in recent years could inflect positively, either helping EM stocks or no longer holding them back.
- Emerging-market stocks appear likely to face specific challenges under a Trump administration, especially related to possible tariffs, although several fundamental factors may be more favorable than in the first Trump administration.
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Why 2025 might be the year for emerging markets
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This content contains statements that are "forward-looking statements," which are based upon certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize, or that actual results will not be materially different from those presented.
Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or a solicitation to buy or sell any securities. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.
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