Global markets are still absorbing the effects of trade tensions and shifting monetary policy, yet many emerging economies remain surprisingly resilient which has been reflected in a relative lack of volatility in listed markets compared to highly rated US stocks. In this week's video we expore in more granular detail how that is playing out at a stock. Director Jonathan Ramsay sat down with Tassos Stassopoulos, Trinetra’s CIO, also explore how structural shifts—well beyond the headline trade narrative—are benefiting both economies and companies across these disparate countries and regions.

 Domestic Demand Opportunities

A core theme in Trinetra’s positioning is the growing power of domestic consumption. While developed economies feel the direct impact of escalating tariffs, many emerging market companies serve predominantly local customers. Trinetra’s portfolio reflects this tilt, with significant exposure to healthcare, consumer goods, and digital services—sectors relatively insulated from global trade disputes. Holdings such as Apollo Hospitals and Titan Company capture robust Indian demand, while exposure to Chinese digital platforms tap rising activity in lower-tier cities supported by government initiatives.

Currency Tailwinds and Commodity Support

A softer U.S. dollar, driven partly by fiscal uncertainty, has reduced dollar-debt burdens and improved competitiveness for several emerging markets. Trinetra’s overweight to Latin America, where commodity exports remain firm and near-shoring trends are gathering pace has been a positive contributor in this environment.

Reform Momentum and Policy Agility

Structural reform and policy flexibility offer another differentiator. While many developed market central banks are constrained, emerging economies have generally responded with agility. During COVID, several Emerging Market central banks acted swiftly to curb inflation, an approach that continues to support financial stability. Trinetra’s exposure to companies like Trip.com and Tencent aligns with broader reforms in Asia aimed at boosting domestic tourism and digitisation.

High-Conviction, Diversified Positioning

Trinetra’s approach is not about blanket Emerging Markets exposure, it leverages these macro trends through a high-conviction, growth-oriented portfolio. With over 87% of its portfolio allocated to emerging markets, and a focus on consumer cyclicals and digital platforms, the fund actively avoids overdependence on global export cycles. Its regional mix spans Asia, Latin America, and emerging Europe, mitigating single-country risk while capturing distinct local growth stories.

What Could Go Wrong

Despite their recent resilience, emerging markets and strategies such as Trinetra’s are not immune to downside risks:

1. Escalating Trade Tensions: A renewed or broader trade war could disrupt supply chains, curtail foreign direct investment, and trigger factory closures in export-reliant regions of Asia and Latin America.

2. Macro-Financial Spillovers: Indirect effects—slower global growth, a stronger U.S. dollar, and swings in commodity prices—can pressure EM currencies, raise external borrowing costs, and sap household spending power. If U.S. monetary policy stays tight, many EM central banks will have less scope to offset shocks with rate cuts.

3. China’s Slowdown and Export Surplus: Disinflation and softer demand in China may ripple through commodity exporters and regional supply chains. Surplus Chinese production could also translate into cheaper exports, putting competitive pressure on local manufacturers and employment in other emerging economies.

These risks underscore the importance of careful position sizing, diversified regional exposure, and ongoing monitoring of macro conditions.