The innovation map just got redrawn—and Wall Street missed it

If you still think of "emerging markets" as risky developing nations, you're not alone—and you're missing one of the biggest investment stories of the decade.

Here's something that might surprise you: In 2023, Asia filed 69%¹ of the world's patents. Not the US. Not Europe. Asia. By comparison, America filed just 18%, and Europe a mere 10%.

Let that sink in for a moment. The global innovation engine has shifted—and most investors are still looking in the wrong direction.

The Hidden Tech Giants

Take South Korea. Most people know it for Samsung phones and K-pop. But here's what they don't know: South Korea controls 70%² of the world's memory chip market. Even more impressive? They dominate the production of high bandwidth memory chips—the specialized components that power AI systems.

Think of it this way: every time ChatGPT generates a response or a self-driving car processes data, there's a good chance a South Korean chip is doing the heavy lifting. The market for these AI-critical chips alone is expected to hit US$100 billion by 2030³.

Taiwan tells a similar story. Its semiconductor foundries are at the absolute cutting edge of chip manufacturing. Between 2014 and 2024, Taiwan nearly doubled its annual investment in tech research and development to US$28 billion⁴. That's not the behavior of a follower—that's a leader pulling away from the pack.

The Discount Nobody's Talking About

Here's where it gets interesting for investors. Despite leading in innovation and producing the components that power our digital lives, emerging market stocks trade at massive discounts compared to their US and European counterparts.

How massive? Try 49%⁵ cheaper on book value and 38% cheaper on earnings.

Imagine walking into a store where everything is half price, but the quality is just as good—or better. That's essentially what's happening in these markets today.

The Middle Class Factor

But the tech story is only part of it. Emerging markets are adding hundreds of millions of people to the middle class—people who want smartphones, cars, healthcare, and entertainment. This consumer wave is happening across China, India, Brazil, and increasingly in places like Saudi Arabia.

This isn't just an investment theme. It's a fundamental reshaping of the global economy.

The Bottom Line

The world has changed, but many investors are still using an outdated map. While emerging markets will always carry their own risks, the structural advantages—young populations, technological leadership, expanding consumer bases, and attractive valuations—create a compelling case for taking a fresh look.

The question isn't whether these markets are worth watching. The question is: can you afford to keep looking away?

Adapted from: Franklin Templeton. (2025). Global emerging market opportunities. Franklin Templeton

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