Navigating the Shifting Sands: Nomura's Take on Emerging Markets in Q4 2025

Well, what a whirlwind of a quarter it was for emerging markets! As we close out 2025, the fourth quarter truly offered a tapestry of economic narratives, presenting both significant hurdles and, importantly, some rather compelling opportunities for investors. Here at Nomura, we've been working diligently to not just observe these shifts but to position our Emerging Markets Fund deftly within them.

Globally, you could feel a palpable sense of anticipation building around interest rate trajectories, particularly from major central banks. This, coupled with some lingering inflationary pressures in various corners of the world, kept market participants on their toes. But beneath the headline-grabbing macro events, individual emerging economies were often telling wildly different stories, wouldn't you agree? It was never a one-size-fits-all scenario, and our active management approach truly shone in identifying those nuanced divergences.

Looking at the fund's performance for Q4 2025, we managed to deliver a resilient showing, somewhat outpacing our benchmark even as certain sectors and regions faced headwinds. This wasn't by chance; it was the direct result of our persistent focus on fundamental research and a strong conviction in quality companies with robust balance sheets and sustainable growth drivers. We spent considerable time analyzing companies that could weather economic storms while still capturing long-term structural tailwinds unique to their local markets.

Geographically, Asia continued to be a fascinating landscape. While China's economic recovery presented a mixed picture – showing signs of life in some areas while still grappling with property market concerns – our selective approach to the region paid off. We found strong pockets of growth in Southeast Asia, particularly in economies benefiting from diversified manufacturing bases and burgeoning digital adoption. India, on the other hand, just continued its remarkable domestic demand story, with strong corporate earnings and government-led infrastructure initiatives providing a significant boost.

Latin America, as always, brought its own unique blend of political dynamics and commodity-linked movements. Our strategy here was quite targeted, focusing on high-quality exporters and domestic champions showing strong pricing power. Meanwhile, parts of Eastern Europe and Africa presented a more varied picture, with commodity producers often benefiting, while import-reliant nations faced tighter economic conditions. It really underlines the importance of a granular, bottom-up view rather than painting the entire 'emerging market' landscape with a single brush.

As we peer into the early days of 2026, the global economic outlook remains complex, that's for sure. But here's the thing: we're actually quite optimistic about the long-term potential within emerging markets. Demographic trends, technological leapfrogging, and a growing consumer class continue to represent powerful, enduring themes. Our fund remains committed to identifying those hidden gems and future leaders, carefully balancing risk with the exciting growth prospects these dynamic economies offer. We believe that by staying agile, focused on quality, and embracing the inherent diversity of emerging markets, we're well-positioned to continue delivering value for our investors.