8 emerging markets to consider in 2027: HSBC

Investing.com -- HSBC has identified eight emerging equity markets it favours heading into 2027, citing opportunities in artificial intelligence, economic reforms and resilience to global shocks.

In its October 6 emerging markets strategy report, HSBC maintained overweight ratings on Taiwan, mainland China, Brazil, South Africa, Türkiye and Hungary, while upgrading the United Arab Emirates and Colombia to overweight.

The bank said emerging markets face four major challenges: elevated oil prices, El Niño-related food inflation, rising US bond yields and rapid developments in artificial intelligence.

HSBC expects investors to increasingly favour economies with greater independence in resources, technology, financing and access to international markets, describing this as an "autonomy premium."

Taiwan remains a preferred AI investment destination, supported by demand for advanced semiconductors, packaging, cooling systems and other infrastructure. HSBC noted that nearly 60% of listed-company revenues are linked to AI-related activities.

Mainland China offers opportunities in AI hardware, innovation and exporters, with HSBC highlighting relatively attractive valuations and improving earnings momentum.

Brazil could benefit from monetary easing and elevated oil prices. HSBC sees favourable risk-reward prospects ahead of the country’s presidential election.

South Africa offers exposure to precious metals, with higher commodity prices supporting mining cash flows while structural reforms could improve corporate profitability.

The UAE, upgraded from neutral, benefits from resilient expatriate activity, infrastructure investment and relatively limited foreign investor positioning.

Türkiye offers opportunities tied to economic normalisation, defence, aviation, AI and reconstruction-related investment, according to HSBC.

Hungary could benefit from the release of frozen European Union funding, reform momentum and increased investment, although currency and political risks remain.

Colombia, also upgraded from neutral, offers potential upside from fiscal consolidation, oil and gas deregulation and reconstruction-related exports.

HSBC simultaneously downgraded Mexico, Chile and Egypt to neutral, citing weaker catalysts and increased economic risks.

The bank maintained underweight positions on India, Thailand, Indonesia and the Philippines.

HSBC said its increasingly selective positioning reflects a changing global investment environment in which economic resilience and strategic independence could become more important drivers of equity performance.