If 2025 is remembered for one thing, it will be the year that artificial intelligence (AI) went stratospheric. Despite concerns that valuations are in a bubble, there’s a general consensus that AI stocks could continue to rally in 2026 as companies invest in data centres and infrastructure to train and run large language models. But, as any savvy investors know, variety is the spice of life and those looking to diversify away from AI and big tech would be wise to turn their attention overseas.

According to the Association of Investment Companies’ annual poll of fund managers, 38 per cent believe emerging markets could offer the most attractive returns in 2026. The UK was in second place, with 19 per cent believing it will be the best-performing region this year.

But ‘emerging markets’ is a little vague, isn’t it? To offer some further insight, we investigate the outlook for the emerging market countries where investors might find compelling opportunities – and explain how to invest in them.

China

China is entering 2026 “with more policy visibility than at any point since the start of its post-pandemic slowdown,” says Kate Leaman, chief market analyst at AvaTrade.

Weak domestic consumption saw China’s industrial profits fall 13.1 per cent in November, offsetting the 5.9 per cent growth in exports. Overall, the country’s economy grew by 2.5 per cent in 2025, according to data collected by Rhodium Group. As ever, international investors are reminded of the importance of considering the reliability of official statistics, with the Rhodium figure being nearly half the 5.2 per cent growth rate through the end of September reported by the Chinese government.

Nevertheless, Beijing leaders outlined their economic focus for 2026-2030 in October, which they hope will stimulate the economy. As well as boosting domestic demand, other top priorities will be innovation, modernisation and tech self-sufficiency.

Forecasts for China’s annual growth in 2026 differ widely. Rhodium Group is estimating a rate of 1 per cent to 2.5 per cent, way below Goldman Sachs’ guide range of 4.3 per cent to 4.8 per cent. The International Monetary Fund (IMF), meanwhile, is estimating the country’s GDP growth will be 4.8 per cent.

India

According to Reuters, India’s economy grew at its fastest pace in 18 months, expanding by 8.2 per cent during the July-September 2025 period, and entered 2026 on a strong footing. Prime Minister Narendra Modi introduced tax cuts towards the end of 2025 to bolster domestic consumption in reaction to US President Donald Trump hitting India with a 50 per cent tariff on exports.

“India stands out as one of the most structurally attractive equity markets in the world,” says Leaman, adding that the country’s main stock indices, the Nifty 50 and Sensex, are predicted to continue reporting new record highs in 2026. Growth will likely be fuelled by auto makers, banks, energy and real estate.

Goldman Sachs expects the country’s economy to grow by 6.7 per cent this year, slightly ahead of the IMF’s most recent forecast of 6.6 per cent. ​India’s stock valuations are “high compared to other emerging markets” but, argues Leaman, this premium reflects the strong growth and favourable policies. “This makes the country an appealing destination for investors willing to pay for quality and a predominantly home-grown growth story,” she adds.

South Korea

South Korea is set to show resilience in 2026. Bank of Korea, the country’s central bank, has projected the economy will grow 1.8 per cent, a rebound from the 1 per cent it grew during 2025. The IMF’s current forecast for 2026 growth, however, is 0.9 per cent.

This growth rate may be modest, but demand for memory chips for data centres from South Korea’s semiconductor giants Samsung Electronics and SK Hynix — the pair signed a deal in October to supply chips to ChatGPT creator OpenAI — is likely to remain red hot this year.

This should drive an increase in exports and, ultimately, investment opportunities. “For investors, this translates into a market geared to global capital expenditure and tech cycles,” says Leaman. “There’s potential for outsized upside if the AI investment wave remains durable.”

How to invest in emerging markets

China, India and South Korea all have structural stories that present investors with opportunities. “The domestic demand trends and rising middle classes, even in the face of uneven global trade, make valuations in the Asia region attractive,” says Paul Ferrara, senior wealth counsellor at independent private wealth manager Avenue.

Investors looking to gain exposure to emerging markets might want to consider buying shares in individual stocks. A number of China’s big tech companies (e.g. Alibaba, Tencent) and EV makers (BYD, XPeng) are dual-listed in Hong Kong and the US and so are available on the Nasdaq or New York Stock Exchange. Some of India’s banks (HDFC, ICIC) and leading tech players (Infosys, Wipro) are also listed in the US. Other companies (Samsung Electronics) can be bought via Global Depository Receipts on the London Stock Exchange.

Buying individual stocks requires time and effort to research, monitor and manage, however. An alternative approach is to invest in a fund that offers broad exposure to a country by tracking a group of companies listed in said country, such as the iShares MSCI China ETF or the iShares MSCI South Korea ETF. These funds are what’s known as ‘passively managed’: they try to match the performance of a country’s stock index, as opposed to beat the market, and are less risky as a result.

A fund-based approach is probably better for investors looking to grow and compound their wealth over time. After all, the fact that emerging market stocks are at a discount to US equities doesn’t mean investing in them is “a one-way bet,” warns Ferrara.

He adds: “My perception of global equity opportunities is through long-term planning and risk management. Client money has to grow steadily and not get caught in the short-term stories.”

Read more: How to invest in 2026