Emerging markets have underperformed developed markets for nearly 15 years, but something has shifted. Titanium's Portfolio Manager Joni Leskinen tells Listeds why he is overweight on South Korea, Taiwan, Brazil, and Poland, and why China and India have been pushed to the sidelines.
When emerging markets are discussed as a single asset class, the essentials get lost. Leskinen's approach is built on two layers: macro picks the most favourable markets, and from those, he hunts for companies with strong global positioning.
"Emerging markets have changed dramatically," Leskinen says. "The key themes right now are artificial intelligence, defence, and electrification. South Korea and Taiwan stand out particularly well in these areas; that's where you find companies with a strong global strategic position and pricing power that should hold up for some time yet."
China and India are at unusually low weights. In India, earnings growth has stalled, and recent geopolitical events have pushed up inflationary pressure; the high share of food in the consumption basket makes the situation tricky. China is wrestling with property-sector problems, including weak domestic consumption.
"Even though we are underweight China, the structure of our holdings differentiates us significantly from the index. China is still one of the global leaders in battery, robotics, and AI technology, and its ability to scale is the strongest anywhere."
In practice, the fund's country weights deviate meaningfully from the usual category reference. The fund runs no formal benchmark, but measured against the MSCI Emerging Markets Index, the standard yardstick for the asset class, Brazil is around 8% of the portfolio versus roughly 5% in the index. Poland is roughly 4% versus 1%. South Korea's core weight is about 10 percentage points above it.
South Korea: Value-Up is starting to show in the numbers
The Kospi, South Korea's main stock index, has finally begun to price in what the "Korea discount" debate has been calling for over many years. The Corporate Value-Up Program, a government reform launched in 2024 to push listed companies toward stronger shareholder returns and better governance, has produced concrete results faster than most expected.
"Dividend yields have improved noticeably, buybacks are back, and the cancellation of treasury shares in particular has exploded. In 2023, share cancellations totalled around €2.9 billion; in 2024, the figure was already €7.6 billion; and in 2025, more than €13 billion. Value-Up has started to work."
Despite the strong rally, shares are still cheap. Investors are paying only about eight times expected annual earnings, low by global standards, where the US market is closer to 20. Memory-chip names look cheaper still once their fast growth is taken into account: on a growth-adjusted basis, they screen as undervalued, which Leskinen sees as leaving room for further upside even after the recent run.
Alongside memory, Korea offers attractive picks linked to the electrification megatrend and a defence sector worth highlighting separately.
"Korean defence companies are top-tier, with short delivery times and a strong global order book. Finland, Poland, and several Middle Eastern countries have placed orders. AI, defence, and electrification are three themes that should run for several years and do so profitably."
Taiwan: TSMC and the year of semiconductor winners
Taiwan's story is dominated by one company and one sector: semiconductors. The wave of huge spending by tech giants on AI, the data centres, servers, and chips needed to build and run it, has lifted the sector's growth rates to a rare level.
By one useful measure, Leskinen says, Taiwan's leaders still look cheap. The idea is simple: the faster a company is growing, the more its earnings are worth paying for, so a high valuation can still be a bargain if growth is fast enough. The standard gauge for this, the PEG ratio, divides a stock's price-to-earnings multiple by its growth rate, and anything below one is usually read as attractive.
"For many quality names, the PEG ratio is below one. TSMC's revenue and earnings growth have been clearly above 30%, and results have beaten analyst expectations quarter after quarter."
One of the biggest worries on every investor's mind, a China conflict, gets a measured assessment from Leskinen.
"I don't see this China risk as realistic. China's leadership plays the long game, and military action against Taiwan would shatter China's own growth targets through sanctions. China is not yet self-sufficient in all key sectors."
Brazil: a cheap market, a commodity tailwind, and an election question mark
Brazil is the classic high-beta emerging market, with a macro picture that has been a roller coaster in recent years.
Brazil's President, Luiz Inácio "Lula" da Silva, returned to office in 2023 for a third term, and Leskinen credits his government with a run of solid economic numbers:
"During Lula's term, unemployment has fallen to a historic low, GDP has grown well, around 3.4% in 2024 and over 2% in 2025, and private consumption has strengthened. Bolsa Família and minimum-wage increases have shown up especially in poverty reduction and rising school attendance, which matters in particular for girls' education."
Bolsa Família is Brazil's long-running welfare programme, which pays cash to low-income families on the condition that their children stay in school and keep up with health check-ups. It is one of the largest schemes of its kind in the world.
Public debt is, however, the variable to watch, alongside whether commodity prices stay higher than expected; Brazil's commodity-driven economy benefits directly from that. The big banks are in good shape, and earnings momentum looks solid.
"Presidential elections are in October, and that is a meaningful volatility driver. Brazil is also interesting from a currency standpoint at this point in the cycle."
Poland: Europe's bright spot and a country of doers
If South Korea and Taiwan represent the technology edge of emerging markets, for Leskinen, Poland represents one of the best of Europe's real economy.
"Poland's outlook is excellent. GDP growth this year is between 3 and 3.8%, equities are cheap at 10 to 11x earnings, the labour force is well educated, and the country is seeing strong reverse migration, including from the UK. Private consumption is growing, and Poland sits in a logistical sweet spot geographically."
The market has been supported by the unlocking of EU recovery funds, but Leskinen is clear that the Poles themselves have done the work. This is a "country of doers". His shopping list is concentrated in banks, where ROEs are running around 20% and dividend yields are strong.
"If and when Ukrainian reconstruction eventually starts, certain Polish companies and sectors are exceptionally well positioned for it. At that point, we'll most likely raise our Poland weight further."
Currency risk: no hedging, and that's the point
One of the perennial questions retail investors ask about emerging markets is currency risk. Leskinen's answer is direct: Titanium does not hedge the won, the real, or the zloty.
"Hedging costs are quite high, and the assumption is that local currencies appreciate over the longer term as the economy grows faster than developed markets. Even if hedging were cheaper, I would skip it."
Risks priced in, except possibly Poland
Geopolitical risk in emerging markets has, in Leskinen's view, generally come down compared with the historical baseline. Paradoxically, US policy now looks less predictable than, for instance, China's. One thing, however, is not being priced.
"If Russia were to start testing the borders, Poland would be in a geographically difficult position, and markets are not pricing this at all. My base case is that Russia will leave Poland alone, and Poland itself has invested heavily in defence over the past few years."
The most important structural shift, in Leskinen's reading, is the falling dependence on the United States. Trade between emerging markets has grown rapidly, the bilateral trade of China and India being a striking example, and the resilience emerging markets showed during Trump's tariff push and the Iran conflict was, in his words, "a remarkable change."
ESG in emerging markets through opportunities, not just risk
Leskinen's ESG background colours the approach, and emerging markets are surprisingly interesting in this respect: in many places, he says, sustainability work is now done much better than in Europe.
"Europe focuses on ESG risks and risk reporting. But sustainability is an essential tool when assessing the long-term potential of an investment, meaning the opportunities. When I was talking with a Brazilian bank, I didn't even get to ask about social responsibility or human capital before they started walking me through them in detail as part of their corporate culture. In places, it's done better than in Western ESG reporting."
Korea's Value-Up obliges the board to act in the interests of all shareholders, and China has introduced a rule whereby a company whose price-to-book stays below one for a long period must produce an action plan to lift its valuation. Leskinen sees global reporting standards being adopted across emerging markets at a fast pace.
The takeaway for retail investors
The way Leskinen tells it, the 15-year slump in emerging markets is an index-level illusion: beneath it, individual markets and sectors have evolved at very different speeds.
Right now, in his reading, the opportunities sit at the intersection of three themes: AI, defence, and electrification, and within those, especially in South Korea, Taiwan, Poland, and increasingly cheap Brazil.
Almost everywhere, he argues, the risks are already in the price, with Poland the possible exception. And with Value-Up-style reforms rewarding well-run companies, the case for picking individual markets and stocks is, in his view, stronger than it has been in a decade.
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Emerging markets have underperformed developed markets for nearly 15 years, but something has shifted. Titanium's Portfolio Manager Joni Leskinen tells Listeds why he is overweight on South Korea, Taiwan, Brazil, and Poland, and why China and India have been pushed to the sidelines.
When emerging markets are discussed as a single asset class, the essentials get lost. Leskinen's approach is built on two layers: macro picks the most favourable markets, and from those, he hunts for companies with strong global positioning.
"Emerging markets have changed dramatically," Leskinen says. "The key themes right now are artificial intelligence, defence, and electrification. South Korea and Taiwan stand out particularly well in these areas; that's where you find companies with a strong global strategic position and pricing power that should hold up for some time yet."
China and India are at unusually low weights. In India, earnings growth has stalled, and recent geopolitical events have pushed up inflationary pressure; the high share of food in the consumption basket makes the situation tricky. China is wrestling with property-sector problems, including weak domestic consumption.
"Even though we are underweight China, the structure of our holdings differentiates us significantly from the index. China is still one of the global leaders in battery, robotics, and AI technology, and its ability to scale is the strongest anywhere."
In practice, the fund's country weights deviate meaningfully from the usual category reference. The fund runs no formal benchmark, but measured against the MSCI Emerging Markets Index, the standard yardstick for the asset class, Brazil is around 8% of the portfolio versus roughly 5% in the index. Poland is roughly 4% versus 1%. South Korea's core weight is about 10 percentage points above it.
South Korea: Value-Up is starting to show in the numbers
The Kospi, South Korea's main stock index, has finally begun to price in what the "Korea discount" debate has been calling for over many years. The Corporate Value-Up Program, a government reform launched in 2024 to push listed companies toward stronger shareholder returns and better governance, has produced concrete results faster than most expected.
"Dividend yields have improved noticeably, buybacks are back, and the cancellation of treasury shares in particular has exploded. In 2023, share cancellations totalled around €2.9 billion; in 2024, the figure was already €7.6 billion; and in 2025, more than €13 billion. Value-Up has started to work."
Despite the strong rally, shares are still cheap. Investors are paying only about eight times expected annual earnings, low by global standards, where the US market is closer to 20. Memory-chip names look cheaper still once their fast growth is taken into account: on a growth-adjusted basis, they screen as undervalued, which Leskinen sees as leaving room for further upside even after the recent run.
Alongside memory, Korea offers attractive picks linked to the electrification megatrend and a defence sector worth highlighting separately.
"Korean defence companies are top-tier, with short delivery times and a strong global order book. Finland, Poland, and several Middle Eastern countries have placed orders. AI, defence, and electrification are three themes that should run for several years and do so profitably."
Taiwan: TSMC and the year of semiconductor winners
Taiwan's story is dominated by one company and one sector: semiconductors. The wave of huge spending by tech giants on AI, the data centres, servers, and chips needed to build and run it, has lifted the sector's growth rates to a rare level.
By one useful measure, Leskinen says, Taiwan's leaders still look cheap. The idea is simple: the faster a company is growing, the more its earnings are worth paying for, so a high valuation can still be a bargain if growth is fast enough. The standard gauge for this, the PEG ratio, divides a stock's price-to-earnings multiple by its growth rate, and anything below one is usually read as attractive.
"For many quality names, the PEG ratio is below one. TSMC's revenue and earnings growth have been clearly above 30%, and results have beaten analyst expectations quarter after quarter."
One of the biggest worries on every investor's mind, a China conflict, gets a measured assessment from Leskinen.
"I don't see this China risk as realistic. China's leadership plays the long game, and military action against Taiwan would shatter China's own growth targets through sanctions. China is not yet self-sufficient in all key sectors."
Brazil: a cheap market, a commodity tailwind, and an election question mark
Brazil is the classic high-beta emerging market, with a macro picture that has been a roller coaster in recent years.
Brazil's President, Luiz Inácio "Lula" da Silva, returned to office in 2023 for a third term, and Leskinen credits his government with a run of solid economic numbers:
"During Lula's term, unemployment has fallen to a historic low, GDP has grown well, around 3.4% in 2024 and over 2% in 2025, and private consumption has strengthened. Bolsa Família and minimum-wage increases have shown up especially in poverty reduction and rising school attendance, which matters in particular for girls' education."
Bolsa Família is Brazil's long-running welfare programme, which pays cash to low-income families on the condition that their children stay in school and keep up with health check-ups. It is one of the largest schemes of its kind in the world.
Public debt is, however, the variable to watch, alongside whether commodity prices stay higher than expected; Brazil's commodity-driven economy benefits directly from that. The big banks are in good shape, and earnings momentum looks solid.
"Presidential elections are in October, and that is a meaningful volatility driver. Brazil is also interesting from a currency standpoint at this point in the cycle."
Poland: Europe's bright spot and a country of doers
If South Korea and Taiwan represent the technology edge of emerging markets, for Leskinen, Poland represents one of the best of Europe's real economy.
"Poland's outlook is excellent. GDP growth this year is between 3 and 3.8%, equities are cheap at 10 to 11x earnings, the labour force is well educated, and the country is seeing strong reverse migration, including from the UK. Private consumption is growing, and Poland sits in a logistical sweet spot geographically."
The market has been supported by the unlocking of EU recovery funds, but Leskinen is clear that the Poles themselves have done the work. This is a "country of doers". His shopping list is concentrated in banks, where ROEs are running around 20% and dividend yields are strong.
"If and when Ukrainian reconstruction eventually starts, certain Polish companies and sectors are exceptionally well positioned for it. At that point, we'll most likely raise our Poland weight further."
Currency risk: no hedging, and that's the point
One of the perennial questions retail investors ask about emerging markets is currency risk. Leskinen's answer is direct: Titanium does not hedge the won, the real, or the zloty.
"Hedging costs are quite high, and the assumption is that local currencies appreciate over the longer term as the economy grows faster than developed markets. Even if hedging were cheaper, I would skip it."
Risks priced in, except possibly Poland
Geopolitical risk in emerging markets has, in Leskinen's view, generally come down compared with the historical baseline. Paradoxically, US policy now looks less predictable than, for instance, China's. One thing, however, is not being priced.
"If Russia were to start testing the borders, Poland would be in a geographically difficult position, and markets are not pricing this at all. My base case is that Russia will leave Poland alone, and Poland itself has invested heavily in defence over the past few years."
The most important structural shift, in Leskinen's reading, is the falling dependence on the United States. Trade between emerging markets has grown rapidly, the bilateral trade of China and India being a striking example, and the resilience emerging markets showed during Trump's tariff push and the Iran conflict was, in his words, "a remarkable change."
ESG in emerging markets through opportunities, not just risk
Leskinen's ESG background colours the approach, and emerging markets are surprisingly interesting in this respect: in many places, he says, sustainability work is now done much better than in Europe.
"Europe focuses on ESG risks and risk reporting. But sustainability is an essential tool when assessing the long-term potential of an investment, meaning the opportunities. When I was talking with a Brazilian bank, I didn't even get to ask about social responsibility or human capital before they started walking me through them in detail as part of their corporate culture. In places, it's done better than in Western ESG reporting."
Korea's Value-Up obliges the board to act in the interests of all shareholders, and China has introduced a rule whereby a company whose price-to-book stays below one for a long period must produce an action plan to lift its valuation. Leskinen sees global reporting standards being adopted across emerging markets at a fast pace.
The takeaway for retail investors
The way Leskinen tells it, the 15-year slump in emerging markets is an index-level illusion: beneath it, individual markets and sectors have evolved at very different speeds.
Right now, in his reading, the opportunities sit at the intersection of three themes: AI, defence, and electrification, and within those, especially in South Korea, Taiwan, Poland, and increasingly cheap Brazil.
Almost everywhere, he argues, the risks are already in the price, with Poland the possible exception. And with Value-Up-style reforms rewarding well-run companies, the case for picking individual markets and stocks is, in his view, stronger than it has been in a decade.
About Leskinen:
Joni Leskinen is a portfolio manager at Titanium, where he runs the Titanium Emerging Markets fund and leads the firm's ESG investment strategy. He specialises in emerging markets and global equities, with a focus on megatrends, quality growth, and how companies position themselves in a changing global economy.
The views above are Joni Leskinen's own and are intended as market commentary, not as investment advice or a recommendation to buy or sell any security. Listeds is not a licensed investment adviser.
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