HSBC names eight emerging markets to watch in 2027

HSBC has singled out eight emerging equity markets it favours as 2027 approaches, pointing to opportunities in artificial intelligence, economic reform and resilience against global shocks.

In an emerging markets strategy report dated October 6, the bank kept overweight ratings on Taiwan, mainland China, Brazil, South Africa, Türkiye and Hungary, while lifting the United Arab Emirates and Colombia to overweight.

According to HSBC, emerging markets confront four principal challenges: high oil prices, food inflation linked to El Niño, climbing US bond yields and fast-moving advances in artificial intelligence.

The bank expects investors to gravitate increasingly toward economies that enjoy greater independence in resources, technology and financing, as well as access to international markets — a trend it labels an "autonomy premium."

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

Mainland China presents opportunities in AI hardware, innovation and exporters, with HSBC pointing to comparatively attractive valuations and strengthening earnings momentum.

Brazil could gain from monetary easing and elevated oil prices, and HSBC sees a favourable risk-reward balance as the country's presidential election approaches.

South Africa offers exposure to precious metals, with stronger commodity prices bolstering mining cash flows, while structural reforms could lift corporate profitability.

The UAE, upgraded from neutral, benefits from resilient expatriate activity, infrastructure spending and relatively light positioning among foreign investors.

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

Hungary may gain from the release of frozen European Union funding, reform momentum and increased investment, though currency and political risks persist.

Colombia, also upgraded from neutral, could see upside from fiscal consolidation, deregulation of oil and gas, and reconstruction-related exports.

At the same time, HSBC downgraded Mexico, Chile and Egypt to neutral, citing weaker catalysts and heightened economic risks.

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

HSBC said its increasingly selective stance reflects a shifting global investment environment in which economic resilience and strategic independence may become more significant drivers of equity performance.