Emerging market stocks can be particularly difficult to understand. However, there is evidence that those who do understand this part of the market can reap benefits. A 2023 study confirmed the belief that stock markets in developed countries are more efficient than those in emerging ones. This means that mispricing happens more in emerging market stocks than in those of developed countries, like the United States. So, emerging market investors may have a better chance of finding companies that are undervalued.
Still, investing in emerging markets is hard and risky. Weighing cultural differences, varied financial reporting standards, and geopolitical uncertainty are to blame. However, being aware of trends in emerging markets can inform investors about what types of businesses are meeting areas of demand abroad. A better understanding of global trends can help make better investment decisions. Below, I’ll detail the three best-performing emerging market stocks in 2024. However, I’ll focus only on those trading on U.S. exchanges. A pattern will stand out in these three names: expanding financial services to developing countries.
Nu: Bringing Fintech to Brazil
Nu (NYSE: NU) is a Brazilian firm that has provided investors a return of over 60% in 2024. The company runs digital banks in South America and Mexico. Unlike many traditional banks, Nu provides its services entirely online. It offers checking and savings accounts as well as credit cards and other consumer loans. It has also extended its services into the world of investments and insurance.
From 2017 to Q3 2024, Nu grew its customer base from just 3 million to 110 million. For much of 2022 and 2023, the company was growing its revenues at over 100%. In 2024, growth has decelerated but is still very strong. Q1 and Q2 saw growth above 75%, and Q3 was at 56%.
Over 50% of the adult Brazilian population are Nu customers. Almost all of Nu's revenue comes from Brazil, it has significant room to expand internationally. Currently, the company is focusing its international expansion efforts in Mexico and Colombia. Adoption has been slow in these countries, with the company only having 9 million and 2 million customers in each, respectively. However, customer acquisition could start to take off in the same way it did in Brazil.
Qufi: AI-Powered Chinese Credit Stock
Qufi Technology (NASDAQ: QFIN) is a stock that has skyrocketed in 2024, providing investors a total return of 135%. A substantial portion of that comes from the firm’s solid 3.3% dividend yield. Qufi is a consumer finance firm that matches borrowers with financial institutions in China. It works with both consumers and small to medium-sized enterprises (SME’s).
Qufi’s revenue growth has been much slower than Nu’s in 2024, reaching a height of 15% in Q1 and falling to just 2% in Q3. However, the company has grown profits extensively. Last quarter, adjusted net income increased by 55% from the previous year.
Qufi has a commitment to using AI for its credit evaluation services. This helps create a flywheel effect as the more information its AI engine can accumulate, the better insights it can offer. This is at least somewhat evident looking at the company’s delinquency rate, or percentage of loans with overdue principal. It is gradually declining, showing the firm's ability to assess credit risk is improving. The company has $450 million in share repurchase power at its fingertips in 2025, which represents around 8% of its current value.
Credicorp: The Nu of Peru
Credicorp (NYSE: BAP) is a diversified Peruvian financial services firm. It engages in banking, insurance, pensions, microfinance, and investment advisory. In all of these areas, the firm holds the first or second largest market share in Peru. In 2024, the stock has provided a total return of 42%.
The company’s massive dividend yield of 17% contributed a big chunk of this. Credicorp’s revenue growth hasn’t been overly spectacular in 2024, but its net income growth is impressive. In Q3, the figure grew over 21% from the previous year.
Credicorp sees many avenues for future growth in Peru, a country where digital finance is still in the early stages. For example, most of the population still uses cash. Credicorp can grow by helping people switch to digital forms of payment. In contrast, over 88% of transactions in Brazil are cashless. Credicorp could be thought of as Peru’s answer to Nu in Brazil. But, it may have more room to grow within its home country.
