Beyond Asia’s Tech Concentration, Latin America Tells A Different Emerging-Market Story

Gaining exposure to emerging markets (EM) has increasingly meant a heavy tilt to technology, concentrated in a few large companies in Taiwan and Korea. Latin America has no information-technology sector constituents. What has that meant for the drivers of risk and return? 

Asia was about 83% of the MSCI Emerging Markets Index,¹ so the broad index carries Asia’s concentration by default. Information technology was 50.1% of the MSCI EM Asia Index by weight, up from 27% in September 2024, and it contributed 71.3% of the index’s total forecast risk.² The three largest holdings (TSMC, Samsung Electronics Co Ltd and SK hynix Inc., all semiconductor manufacturers) are 34.7% of the index by weight but 50.6% of its forecast risk. When risk runs this far ahead of weight, the index’s moves are likely driven by a few names. In contrast, the MSCI EM Latin America Index holds no GICS®³ information technology constituents, though some of its holdings, notably in fintech, carry thematic technology exposure.

Index weight and contribution to total forecast risk (%CR) for the MSCI EM Asia Index, from the MSCI Global Equity Factor Model (GEMLT) in USD; multiple share lines of the same company are combined; as of Aug. 31, 2026. 

In the MSCI EM Latin America Index, the largest sector, financials, contributed 36.6% of total forecast risk on 34.5% of the weight, and its three largest companies, an oil major, a miner and a bank, accounted for 24.4% of the risk on 22.0% of the weight.

Index weight and contribution to total forecast risk (%CR) for the MSCI EM Latin America Index, from the MSCI Global Equity Factor Model (GEMLT) in USD; top three companies are Petrobras, Vale and Nu Holdings, with multiple share lines of the same company combined; as of Aug. 31, 2026. 

The same rally that concentrated the MSCI EM Asia Index’s risk also lifted its price-to-book ratio to the top of its range since 2010. The MSCI EM Latin America Index fell to the third percentile of its price-to-book range against Asia over the same period, and is currently valued at 10.7 times forward earnings against 14.0 times for the MSCI EM Asia Index.

Relative valuation = MSCI EM Latin America Index ÷ MSCI EM Asia Index. A ratio below 1.0 means Latin America is cheaper than Asia. The forward price-to-earnings (P/E) ratio (▲) rose above the chart’s 1.35 ceiling in 2016 and 2020–2021, periods of depressed regional earnings. Monthly, August 2010–August 2026; as of Aug. 31, 2026. 

Latin America was the weaker performer from Aug. 31, 2011, to Aug. 31, 2026, returning 2.1% per year net in USD against 7.9% for the MSCI EM Asia Index. A value trap is a market that is cheap because its earnings are falling, and Latin America’s are not: for the MSCI EM Latin America Index, trailing earnings are 22.8% higher than a year ago, return on equity is 18.6%, and companies distribute 51% of what they earn. Much of the discount instead reflects Asia’s rerating, given its relatively high price-to-book ratio. Over the 12 months ended Aug. 31, 2026, the MSCI EM Latin America Index returned 32.7% net in USD, its valuations expanding while the discount to Asia held.

Trailing 12-month dividend yield (%); monthly, January 2013–August 2026; as of Aug. 31, 2026. 

Unlike Asia, Latin America’s concentration is in its country mix. Brazil is 59.3% of the MSCI EM Latin America Index by weight and 68.0% of its forecast risk. Hence, Brazil is a single-country concentration similar in size to Asia’s single-sector focus. That weight reflects the size of Brazil’s listed market rather than its economy, which is closer to two-fifths of the region. Mexico and Colombia, by contrast, are larger economies than their share of the listed market suggests.

Country weight (%) in the MSCI EM Latin America Index (market-cap) and the MSCI EM Latin America GDP Index; as of Aug. 31, 2026. 

This economic weighting is expressed by the MSCI EM Latin America GDP Index. It scales each country’s weight to its share of regional GDP once a year in the May index review, and weights then move with the market until the next review. Brazil’s weight becomes 41.7% (rather than 59.3%) while Mexico rises to 33.2% from 25.3%, and Colombia to 10.7% from 2.5%. This alternative approach reduces single-country concentration by means of economic fundamentals. There is a trade-off as liquidity and tradability are often more aligned with market-cap weights. 

The MSCI EM Latin America Index holds no information technology sector constituents, and its risk is spread more evenly across sectors and stocks than in the MSCI EM Asia Index. It is valued at its widest discount to Asia since 2010 and yields about three times as much. For EM investors whose exposure increasingly rides on a few Asian chipmakers, Latin America brings different drivers of risk and return: banks, oil and mining. Looking at EM exposure region by region, rather than only in aggregate, shows how much of that risk comes from Asian technology. Latin America’s own concentration is by country, and weighting by GDP is one approach investors can consider to address that.