Why Emerging Markets Investment Could Dominate 2026: A Case for ICICI Bank, TSMC, and MercadoLibre

Investors seeking alpha in 2026 should look beyond traditional developed markets. The emerging markets investment landscape has fundamentally shifted, presenting a rare convergence of growth potential and valuation opportunity.

The Valuation Case That Changes Everything

Here’s what most investors are missing: emerging markets equities currently trade at roughly a 35% discount to developed-market counterparts on forward price-to-earnings metrics—the widest gap in 15 years, according to RBC Global Asset Management. This isn’t weakness; it’s opportunity. Meanwhile, earnings momentum across emerging markets is accelerating. J.P. Morgan’s 2025 analysis shows this is the first year since 2020 that emerging-market equities have outperformed developed-market equities, driven by improving fundamentals and a softer U.S. dollar environment.

The macro backdrop supports continued strength. EM economies are projected to grow 4.2% in 2025, according to the IMF’s October 2025 update—nearly triple the 1.6% expected growth in advanced economies. Emerging markets now represent 50.6% of global GDP and have contributed 66.5% of global GDP growth over the past decade. This structural advantage, combined with the valuation discount, sets the stage for a potential re-rating as profitability recovers.

Two Structural Tailwinds Reshaping EM Performance

Credit expansion driving financial services growth: Monetary easing across developing nations has dramatically improved lending conditions. Lower global interest rates, moderating inflation, and stabilizing currencies have reduced funding volatility and credit-risk pressures for emerging-market banks. The result: double-digit year-over-year credit growth in key economies like India, the Philippines, and Vietnam from 2024 through mid-2025. Rising loan demand from households and small businesses is supporting stronger returns on equity and expanding margins.

Supply-chain diversification fueling manufacturing momentum: Multinational firms are actively relocating production away from single-country dependencies. India captured $19.04 billion in manufacturing FDI during the 2024-25 fiscal year, with mobile phone exports surging to $20.5 billion in 2024—up from nearly zero in 2016. Vietnam and Indonesia are similarly benefiting from this production shift.

Three Emerging Markets Investment Bets Positioned for 2026

ICICI Bank (IBN): This Mumbai-headquartered financial institution exemplifies the emerging markets investment thesis. ICICI Bank’s digital transformation is gaining traction, with its iMobile Pay platform driving retail adoption and corporate uptake. The company’s business-focused digital platform has shown exceptional growth momentum. With a Zacks Rank #2 (Buy) rating, ICICI Bank is expected to deliver 13.9% earnings growth on 13.1% revenue growth in fiscal 2027. Its long-term earnings growth of 32.2% substantially outpaces the industry’s 9.3%. Trading at a forward P/E of 17.25—well below the S&P 500’s 23.44—this stock offers compelling value within the emerging markets investment space.

Taiwan Semiconductor Manufacturing Company (TSM): TSMC remains the foundational play for artificial intelligence infrastructure globally. The company’s dominance in advanced semiconductor manufacturing, particularly its leadership in sub-3nm production with 2nm on the horizon, positions it as the essential partner for AI accelerators and custom silicon. Major clients including NVIDIA, Marvell Technology, and Broadcom rely on TSMC’s capabilities. This Zacks Rank #2 stock projects 20.2% earnings growth on 20.6% revenue growth for 2026, with long-term earnings growth of 28.7% significantly outperforming the broader market. At 25.72x forward P/E—below the semiconductor sector average of 29.09—TSMC offers compelling exposure to emerging markets investment themes tied to global tech advancement.

MercadoLibre (MELI): Buenos Aires-based MercadoLibre uniquely captures two mega-trends: e-commerce penetration and financial inclusion across Latin America. The company’s scale, technology infrastructure, and regional execution create a moat that competitors cannot replicate. Third-quarter 2025 results underscore the strength: 39% revenue growth and 41% total payment volume expansion demonstrate that the addressable market remains in early growth stages. For 2026, MercadoLibre is projected to post 50.3% earnings growth on 28.5% revenue growth—far outpacing traditional retail and fintech peers. Its long-term earnings growth of 34.6% dwarfs the industry average of 18.1%. Trading at 2.75x forward price-to-sales, well below the S&P 500’s 5.3x, MercadoLibre represents a high-growth emerging markets investment opportunity with meaningful margin expansion ahead.

Why This Matters for 2026

The emerging markets investment opportunity in 2026 rests on three pillars: valuations at historic discounts, earnings growth accelerating beyond developed markets, and structural tailwinds from credit expansion and supply-chain reshuffling. ICICI Bank, TSMC, and MercadoLibre each offer exposure to these trends while trading at attractive entry points. For investors positioning portfolios for the year ahead, emerging markets investment deserves a serious allocation.