The concept of emerging markets became part of investment professionals’ vocabulary in the early 1980s. At the time, it referred to only a handful of countries, with investment opportunities limited to a few hundred companies at most, operating in cyclical sectors. But emerging markets have changed considerably since then, offering investors new opportunities. “Over the past few years, traditional industries like energy, metals and mining have increasingly taken a back seat to new, more innovative players, operating mainly in the digital space and more focused on consumers. We’ve seen the emergence of next-generation companies with global ambitions,” says Vine. “So there’s now an entirely different opportunity set for investors.” In a recent white paper, this investment specialist at Capital Group listed 10 trends she believes will drive opportunities in emerging markets over the next 10 years.

Sectors fueled by domestic demand

Vine says one of the most buoyant sectors is healthcare. “A few years ago, healthcare companies in emerging markets focused on producing cheap generic drugs. Now we’re seeing new challengers rise up in the biotech sector. This growth has come in response to growing domestic demand in emerging countries as incomes rise and people want better-quality healthcare. Governments have also been pursuing innovation-friendly policies that favor the emergence of new home-grown champions,” explains Vine.

In the digital sector, the growth outlook in emerging countries is just as encouraging. The pandemic has only increased opportunities in this area, with the uptake of e-commerce and electronic payments accelerating. Investors are also seeing positive developments in the travel sector in these markets. “Before the COVID-19 pandemic, around 150 million people in Asia traveled for the first time every year. Over the next 20 years, the region is set to account for around 50% of the total increase in air traffic thanks to the rapid rise of the middle class,” continues Vine.

Opportunities to be carefully assessed

As incomes rise, the luxury goods sector is also set to prosper over the next few years. And new needs are becoming apparent in emerging markets like China, India and the rest of Asia for things like financial services (with much of the population unbanked), insurance, and mobile and internet technology.

“We can see a combination of trends that point to a broad set of growth opportunities in these emerging countries. They’re now home to some fascinating companies with considerable potential,” explains the investment specialist. “The valuations are also attractive, especially compared to developed markets.” However, investing in emerging markets is not something to be done lightly. “When you’re investing from a long-term perspective, you really have to carefully assess opportunities taking into account market fundamentals, and you have to be very selective about what you include in your portfolio.”

To learn more about Capital Group’s expertise in emerging markets, visit