Discussions regarding customs tariffs and geopolitical tensions were the main focus in the first six months of the year on the financial markets. Where are the markets headed in the second half of 2025?

In our Funds check series, fund managers from selected funds look back on the past year's performance and give their assessment of what we can expect for the rest of the year. (Please note that forecasts are no reliable indicator of future performance and that investing in securities involves risks as well as opportunities.)

Summary

  • From a regional perspective, we continued to build up our exposure in China and Latin America in the first half of the year, as we regard the medium-term growth prospects there as positive in the context of attractive valuations.
  • Equities from the technology sector remain the largest component of the fund, with a particularly strong weighting in the chip sector.
  • For emerging markets, company earnings are expected to rise by 12.3% in 2025 and 12.4% in 2026, which should provide positive support for the markets.
  • 2025 is likely to be another year in which a theme-driven, opportunistic allocation to emerging markets will be necessary.

Fund manager Gabriela Tinti
(c) Stephan Huger

Fund & Performance

The ERSTE STOCK EM GLOBAL invests primarily in companies based or doing business in global emerging markets. The fund's investment process is based on fundamental business analysis. When selecting stocks, the focus is on high-quality, high-growth companies. A hedge against foreign currency risks is generally not provided, but is possible.

Note: Please note that an investment in securities entails risks in addition to the opportunities described. Past performance is not a reliable indicator of future performance.

The performance is calculated in accordance with the OeKB method. The management fee as well as any performance-related remuneration is already included. The issue premium which might be applicable on purchase and as well as any individual transaction specific costs or ongoing costs that reduce earnings (e.g. account- and deposit fees) have not been taken into account in this presentation.

Commentary by fund manager Gabriela Tinti

How do you assess the first half of 2025 on the financial markets?

Global equity markets were performing well in the first half of the year despite high macroeconomic and geopolitical uncertainty. “Liberation Day” with the announcement of massive US import tariffs in early April led to sharp losses on stock markets worldwide. With a 90-day grace period for mutual tariffs (except for China), some exemptions for China and certain electronic products, the markets showed an impressive recovery. The resilience of the US economy and global company earnings, as well as technological advances in artificial intelligence, proved to be drivers for the capital markets worldwide.

Low foreign exposure and limited external imbalances helped emerging markets display “developed market-like” resilience and even outperform them despite the recent volatility in US assets. The weaker US dollar and lower US yields also had a positive impact on equity valuations. Weak investment and consumer confidence and the sluggish property market are weighing on the Chinese economy. However, DeepSeek and the announcement of a huge economic stimulus package improved sentiment in China. A series of measures is intended to strengthen the local economy and municipalities.

 

How did ERSTE STOCK EM GLOBAL perform in this environment?

All emerging markets regions provided a slightly positive contribution to the overall performance. Latin America, Hong Kong, South Korea, CEE, and South Africa accounted for the lion's share in terms of performance, while Taiwan and Saudi Arabia posted negative results. Technology, consumer goods, and financials were the most attractive sectors. In this environment, ERSTE STOCK EM GLOBAL posted a performance of -0.09%. We maintained our investments in high-quality growth shares. Equities from the technology sector remain the largest component of the fund, with a particularly strong weighting in the chip sector (Taiwan Semiconductor).

From a regional perspective, we continued to build up exposure in China and Latin America in the first half of the year, as we view the medium-term growth prospects as positive in the context of attractive valuations and believe that these regions should benefit from global megatrends. In China, South Korea, and Taiwan, we invested in companies benefiting from the megatrends of AI, 5G, data/cloud, electric cars, and computer games. Companies in the commodities sector (gold) in particular posted strong gains. We stepped up investments in Pop Mart Intern., Anglogold Ashanti, Futu Holding, Stoneco, and Q Techn. Group.

Please note: the companies listed here have been selected as examples and do not constitute any form of investment recommendation.

 

What do you expect for the second half?

The analyst consensus expects the global economy to continue its positive performance in 2025, albeit with growing regional differences. The growth differential between emerging markets and industrialised nations remains stable, which is positive for emerging markets. The outlook for solid corporate earnings in emerging markets also supports this growth trend.

Company earnings in the emerging markets are expected to rise by 12.3% in 2025 and 12.4% in 2026. All regions should record positive growth rates, with emerging markets in Asia likely to see the highest growth figures.

2025 will likely be another year in which a theme-driven, opportunistic allocation to emerging markets is necessary. Issues such as changes in trade policy and geopolitical tensions will have a strong influence on equity market performance.

 

Please note: investing in securities involves risks as well as opportunities.

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