We recently compiled a list of the 10 Best Emerging Markets Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where ICICI Bank Limited (NYSE:IBN) stands against the other emerging markets stocks.
Emerging markets stocks are shares of companies based in developing countries – think Brazil, India, China, or South Africa – that are rapidly industrializing and growing their economies. Unlike the familiar and more predictable world of US stocks, emerging markets offer something quite different: higher growth potential coupled with greater volatility, influenced by unique local dynamics such as political shifts, currency swings, and evolving regulations. Why venture into these turbulent waters? Because with higher risk comes the potential for higher rewards. These markets often grow faster than mature economies, making them especially attractive if you’re looking to diversify beyond the stability (and sometimes slower pace) of US equities. Also, exposure to the best emerging markets stocks would not only boost the return profile of a portfolio, but also make it less volatile through diversification – many emerging markets exhibit little to no sensitivity to the state of the economy in the US, meaning that their national economy could continue to grow even when the US is in a recession.
READ ALSO: 10 Best Emerging Technology Stocks to Buy Now
Timing matters, especially when diving into emerging markets stocks. Investing in these companies makes the most sense when global economic conditions are improving, investor sentiment is optimistic, and local political or financial uncertainties are settling down. It’s particularly appealing if you’re a patient investor who can withstand short-term volatility for potentially bigger long-term gains. Additionally, when valuations in developed markets like the US are stretched and growth appears limited, emerging markets stocks can offer a refreshing alternative, giving your portfolio both growth exposure and geographical diversification.
The current tendencies we see in the global markets are highly suggestive that a potential rotation from US stocks to emerging markets stocks would be the right move to make. Despite the US market being in correction mode, valuations still appear stretched, as the whole market trades at a forward P/E above 20x, significantly above the historical average, which is around the mid-teens. This is the first factor that points toward the possibility that US stock market returns will be lower until the end of the decade due to the impact of declining valuations (or, call it a return to more normal valuations). Second, the new Trump 2.0 administration introduced a lot of noise into the US economy – the Atlanta Fed has already lowered its GDP growth estimates for the following quarters as a result of significant cuts in public spending as well as the tariff threats negatively impacting the private spending outlook. This expected economic slowdown is exclusive to the US market, while emerging markets may continue to grow their economies at a usual pace.
Finally, the potential impact of the upcoming reciprocal tariffs on April 2 is still not completely understood by the markets. What is certain is that the tariff threats have already caused inflation in some products, such as construction materials, copper, and other commodities, as businesses rushed to stockpile raw materials and inventories at cheaper prices before tariffs were enforced. Higher inflation, especially in core products like housing, is not good for the economy, as it pressures consumers and erodes their spending power. Higher inflation may also reduce the chances that the FED will lower interest rates any time soon, which is another impediment to economic growth. The key takeaway for readers is that the aforementioned headwinds and threats are mostly exclusive to the US market, while most of the emerging markets are likely to be impacted much less.
A businessperson looking out a city skyline, from the top floor of a high-rise building.
Our Methodology
We shortlisted 20-30 emerging markets stocks that are based in and derive most of their revenue from emerging countries. Then we compared the list with our proprietary database of hedge funds’ ownership and included in the article the top 10 stocks with the largest number of hedge funds owning the stock as of Q4 2024. All stocks are ranked in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
ICICI Bank Limited (NYSE:IBN)
Number of Hedge Fund Holders: 32
ICICI Bank Limited (NYSE:IBN) is a leading private sector bank in India, headquartered in Mumbai. The bank offers a comprehensive range of financial products and services, including retail and corporate banking, investment banking, insurance, and asset management. With a network of over 5,000 branches and 15,000 ATMs across India, IBN serves a vast customer base. The bank has expanded internationally, establishing subsidiaries in the UK and Canada and branches in countries such as the US, Singapore, and Hong Kong. The bank’s primary operations and revenue streams are deeply rooted in the Indian market, providing significant exposure to the emerging market sector.
ICICI Bank Limited (NYSE:IBN) demonstrated strong financial performance with profit before tax excluding treasury growing by 12.8% YoY. The bank’s core operating profit increased by 13.1% YoY to 165.16 billion Rupees, while profit after tax grew by 14.8% YoY to 117.92 billion Rupees. Total deposits showed a healthy growth of 14.1% YoY, with the domestic loan portfolio expanding by 15.1% YoY. The bank maintained strong asset quality with a net NPA ratio of 0.42% and held substantial contingency provisions of 131.00 billion Rupees, representing about 1.0% of total loans.
The capital position of ICICI Bank Limited (NYSE:IBN) remained robust with a CET-1 ratio of 15.93% and a total capital adequacy ratio of 16.60%. The bank continues to focus on risk-calibrated profitable growth through its 360-degree customer-centric approach while maintaining high standards of governance and enhancing delivery capabilities. IBN is on our list of the best emerging markets stocks because it delivers attractive growth across several emerging countries and even managed to outperform the world stock market index in the last 5 years.
Overall IBN ranks 8th on our list of the 10 best emerging markets stocks to buy according to hedge funds. While we acknowledge the potential of IBN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IBN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.