According to the report, Emerging Markets: On the Cusp of a Renaissance published by Lazard Asset Management on October 28, emerging markets are home to 80% of the global population and are on the brink of significant growth, with nearly 2 billion people expected to integrate into their formal economies over the next decade.

Globalization has played a transformative role in improving education, employment, health, and wealth in these markets, creating a promising outlook for economic expansion and earnings growth. Economic and population growth are surging in emerging markets while stagnating or declining in developed economies. This divergence offers investors opportunities to diversify equity and fixed-income portfolios while mitigating risks. Over the past five years, significant outflows from emerging markets have created a fertile landscape for active investment strategies.

Central banks in emerging markets, particularly in Latin America and Eastern Europe, are leading the way in monetary policy innovation. Having raised interest rates during the global inflationary surge of 2021–2022, these regions are now easing rates ahead of their developed counterparts. This proactive approach, combined with the Federal Reserve’s anticipated easing cycle, is expected to bolster emerging market assets by stabilizing local currencies and supporting economic growth.

Read Also: 12 Best Stocks to Invest in for the Next 3 Months and Top 8 Stocks To Buy In 8 Different Sectors for the Next 3 Months.

Emerging markets are among the most undervalued and under-allocated asset classes globally. Despite positive underlying fundamentals, these markets are trading at significant discounts, offering investors a chance to access growth at favorable valuations. Moreover, global investors currently hold a disproportionately low allocation to emerging markets. A reversion to the 20-year average allocation of 8.4% would result in inflows of approximately $910 billion, equivalent to 58% of current assets under management. This influx of capital could serve as a catalyst for long-term appreciation.

As experienced active investors, Lazard Asset Management is focusing on identifying companies with enduring competitive advantages or those poised to develop them. The firm is confident that emerging markets are positioned to deliver strong growth and attractive returns, making them a vital component of any well-diversified investment portfolio. With that in context, let’s take a look at the 7 best emerging markets stocks to buy now.

Our Methodology

To come up with the 7 best emerging markets stocks to buy now, we have used Finviz and Yahoo Finance stock screeners to identify stocks of companies that are based in different emerging market countries. We then used Insider Monkey’s Hedge Fund database to rank the 7 stocks according to the largest number of hedge fund holders, which was taken from the database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of hedge fund sentiment, as of the third quarter.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

7 Best Emerging Markets Stocks To Buy Now

7. LATAM Airlines Group S.A. (NYSE:LTM)  

Number of Hedge Fund Holders: 12

Country: Chile

LATAM Airlines Group S.A. (NYSE:LTM) is the largest airline in Latin America, operating in both passenger and cargo segments. The company serves a vast network of destinations across South America, North America, Europe, and Oceania. The airline serves 149 destinations in 26 countries and cargo destinations in 31 countries.

On November 6, LATAM Airlines Group S.A. (NYSE:LTM) announced financial results for the third quarter ending September 30. The airline’s revenue revenue increased 7.6% year over year to $3.28 billion compared to the same period of 2023, driven by a 15.1% growth in passenger operations. This growth is expected to continue, with the company projecting capacity growth of 15% to 16% for the full year 2024.

LATAM is taking proactive steps to drive growth and profitability by reducing costs and restructuring its debt. On October, 1 the company announced successful debt refinancing to strengthen its capital structure, in which the airline secured a significantly lower interest rate, and is projected to reduce interest payments by nearly $120 million in 2025. As of September 30, LATAM Airlines Group S.A. (NYSE:LTM) has a liquidity cash position of approximately $3.6 billion, which makes the company well-equipped to invest in growth initiatives and expand its operations.

6. Credicorp Ltd. (NYSE:BAP) 

Number of Hedge Fund Holders: 20

Country: Peru

Credicorp Ltd. (NYSE:BAP) is a leading financial services company in Peru, offering a wide range of banking, insurance, and investment management services to individuals, small and medium-sized enterprises (SMEs), and corporate clients. The company’s banking segment offers a range of financial products and services, including loans, deposits, and payment solutions in Peru, Chile, Colombia, Bolivia, and Panama.

Credicorp Ltd. (NYSE:BAP) aims to continue expanding its digital wallet, Yape, with a goal of reaching 16.5 million active users by 2026, building on the momentum of its recent growth. To achieve this, the company plans to invest in further developing Yape’s features and services, enhancing user experience, and increasing its market penetration in Peru and other countries.  In Q3, Yape’s active users reached 13 million.

Additionally, on November 1, Credicorp Ltd.’s (NYSE:BAP) General and Life Insurance businesses, Pacifico Seguros announced the acquisition of the remaining 50% stake in Empresas Banmedica, a move that will give Credicorp Ltd. (NYSE:BAP) full ownership of the private medical insurance business. The acquisition is a strategic move for Credicorp Ltd. (NYSE:BAP), as it will allow the company to expand its presence in the private medical insurance market and improve its ability to provide access to healthcare and insurance services.