Survey shows rising investor confidence in EM, even as global tensions drive caution
Investor appetite for emerging markets is strengthening, but geopolitical uncertainty continues to shape sentiment, according to new research from HSBC.
The bank’s latest Emerging Markets Sentiment Survey reveals a notable rise in optimism, with 68% of respondents expressing a bullish outlook for the asset class over the next three months—up from 63% in the prior survey. Bearish sentiment, meanwhile, remained absent for a second consecutive reading, pushing overall net sentiment to a record high.
The findings mark the 14th straight survey showing positive net sentiment, underscoring sustained confidence in emerging market opportunities despite an increasingly complex macro backdrop.
Within emerging markets, sentiment is strongest toward Asia, with investors pointing to China and India as key drivers of opportunity. Confidence in these markets is underpinned by expectations of policy support, resilient domestic demand, and structural growth trends.
Meanwhile, parts of Latin America are also attracting attention, particularly where higher yields and improving macro conditions are supporting inflows. That said, investors are becoming more selective across regions, favouring markets with stronger fundamentals and clearer policy direction as global uncertainty persists.
However, the survey also highlights a more cautious tone beneath the headline optimism, as geopolitical developments inject fresh uncertainty into investor decision-making.
“Emerging markets (EM) investors are holding the line, even as geopolitics has added a fresh layer of uncertainty to the outlook,” the report states.
The combination of strong conviction and elevated caution reflects a market environment where investors remain constructive but are increasingly mindful of external risks.
HSBC’s data suggests that while sentiment continues to improve, investors are not ignoring potential headwinds. Instead, they appear to be balancing positive expectations for growth with a heightened awareness of geopolitical and macroeconomic volatility.
The persistence of bullish positioning—paired with zero bearish responses—signals a high level of consensus among investors, a dynamic that has historically prompted some market watchers to urge prudence.
Even so, the survey indicates that confidence in emerging markets remains resilient, supported by improving expectations and a continued search for growth opportunities beyond developed economies.
As global conditions evolve, the interplay between conviction and caution is likely to remain a defining feature of investor sentiment toward emerging markets in the months ahead.
