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Meet the Team

TEMIT is managed by an experienced investment team comprising of the following members:

Chetan Sehgal, CFA

Senior Managing Director, Director of Portfolio Management

Andrew Ness

Portfolio Manager, Franklin Templeton Emerging Markets Equity

Overview

Emerging Market (EM) stocks rose in the second quarter of 2026. Sentiment was broadly supported by the signing of a memorandum of understanding (MoU) between the United States and Iran. While scepticism over implementation remains, the prospect of de-escalation and improving shipping activity through the Strait of Hormuz eased oil prices and alleviated concerns about inflation. For the quarter, the MSCI Emerging Markets Index returned 23.25%. The MSCI World Index delivered 13.03%, both in net UK-sterling terms.1

The emerging Asia region advanced, driven largely by the artificial intelligence (AI) theme. Index heavyweights in South Korea and Taiwan supported gains in their respective markets. Accelerated demand for high-bandwidth memory (HBM) chips used in AI infrastructure buoyed semiconductor related stocks. Market gains in Taiwan were largely concentrated in the AI value chain, where companies benefited from robust growth forecasts for the year and supply-chain tightness. Indian equities recovered from the previous quarter, rising on better sentiment from the US-Iran MoU and as crude oil prices moderated.

Chinese stocks fell. A lack of catalysts compared to its Asian peers, tighter regulations on cross-border trading through offshore brokers and ongoing weakness in domestic consumption weighed on parts of the market.

Equities in the emerging Europe, Middle East and Africa region posted gains following earlier geopolitical tensions. Oil prices moved lower, nearly reaching pre-conflict levels. This benefitted oil importers such as Poland and Hungary. The performance of Middle Eastern indices was mixed. Equities in the United Arab Emirates saw investor interest as valuations became more attractive after the sell-off in the first quarter of 2026.

Equities in the emerging Latin America (LatAm) region ended lower. Brazil’s central bank reduced its benchmark interest rate twice in the quarter. However, Brazilian equities reacted cautiously to the latest easing as inflation remains above target and rates may need to stay higher than previously envisaged. Falling oil prices also weighed on Brazil’s state-backed oil company Petrobras. Election uncertainty and fiscal risks also clouded the country’s equity returns. Mexican equities gained as headline inflation moderated back into the central bank’s target range in May. Its central bank eased interest rates once during the quarter.

Portfolio Changes & Positioning

Leading electric vehicle (EV) and battery manufacturer in China, BYD, was among the largest additions this quarter. Our conviction hinges on its vertically integrated EV business model, which has significant scope to gain share in the overseas market. It is also a leading supplier of energy storage systems batteries, which is seeing strong growth in both China and overseas. We therefore took advantage of this share price weakness to increase our exposure.

Overall, we increased investments in the industrials, financials and consumer discretionary sectors. In terms of countries, we undertook purchases in China/Hong Kong and India.

In line with our investment approach, we trimmed our position in South Korean semiconductor company SK Hynix on the back of a share price advancement. SK Hynix remains a key portfolio holding as it retains a leadership position in the high bandwidth memory (HBM) market.

By sector, we reduced our exposure to information technology, energy and consumer staples. Geographically, we made the biggest sales in South Korea, Taiwan and Brazil.

Positive Contributors

TEMIT’s net asset value returned 34.50% over the quarter, compared to the MSCI EM Index-NR’s result of 23.25%, both in UK-sterling terms.

Companies within the AI supply chain performed well this quarter. SK Hynix’s shares rose on a sustained AI chip rally, earnings beat for the first quarter of 2026 and its plan to list its American Depositary Receipts on the NASDAQ. Underscoring the share price rally was soaring global demand for AI infrastructure, resulting in tightened supply of HBM chips. MediaTek is a Taiwan-based semiconductor company evolving into a more diversified compute-chip provider. Its share price benefited from investor focus on its longer-term AI chip opportunities, potential demand from other customers, and reports around Nvidia’s (not a portfolio holding) push into AI-enabled personal computers. The world’s largest printed circuit board manufacturer Zhen Ding rounded out the top three largest contributors.

Detractors

BYD’s share price took a hit. Competitive pressures and weak domestic orders weighed on its share price. Reports that the European Union could impose countervailing tariffs on Chinese plug-in hybrid vehicles also added to share price woes. Other stock-level detractors included leading global investment company Prosus and US-listed technology services company Cognizant Technology Solutions.

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Outlook

EMs continue to evolve, with parts of the asset class transitioning from the world’s manufacturing hub to global innovation centres. Several countries are leaders in key segments of the technology industry, the energy‑transition value chain and automation.

Taiwanese and South Korean semiconductor manufacturers, Chinese EV and battery suppliers, and Asian industrial‑robot producers are positioned to potentially benefit from a wave of hyperscaler investment in 2026 to 2027, presenting multi‑year revenue opportunities and earnings visibility.

Beyond technology, resource‑rich emerging markets in LatAm hold a significant share of the copper, lithium and rare earths required for decarbonisation and the electrification of transport, reinforcing their strategic importance in the global energy transition.

EMs have outperformed developed markets from their 2024 lows as investors have reassessed their growth drivers, earnings quality and valuation discount. For investors, the combination of innovation, improving corporate governance such as South Korea’s value-up programme, and valuation discounts creates a differentiated investment opportunity set.

The information provided is not a recommendation to purchase, sell, or hold any particular security and is not to be taken as advice. It should not be assumed that any securities transactions were or will be profitable.

  1. Source: MSCI. The MSCI World Index captures large- and mid-capitalisation representation across 23 developed market countries. The MSCI Emerging Markets Index captures large- and mid-cap representation across 24 emerging market (EM) countries. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or guarantee of future results. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at www.franklintempletondatasources.com

WHAT ARE THE KEY RISKS?

The value of shares in the Templeton Emerging Markets Investment Trust PLC (TEMIT) and any income received from it can go down as well as up and investors may not get back the full amount invested. There is no guarantee that TEMIT will meet its objective. TEMIT invests in the equity securities of emerging markets companies. Emerging markets have historically been subject to significant price movements, often to a greater extent than more established equity markets. As a result, the share price and net asset value of TEMIT can fluctuate over time. Performance may also be affected by currency fluctuations. TEMIT can borrow to purchase assets for the company; this will magnify any gains or losses made by the company. Shares of TEMIT are bought and sold on stock exchanges, typically, at any given time on any given day, the price you pay for a share will be higher than the price at which you could sell it. In addition, investors should be aware that TEMIT may trade at a discount to its Net Asset Value (NAV) per Share, and such discount may become larger in the future. TEMIT may take charges from the Company’s capital account. While this might allow a larger dividend to be distributed, it may also have the effect of reducing capital. For more details of all the risks applicable to TEMIT, please refer to the Key Information Document, Investor Disclosure Document and the risk section in TEMIT’s Annual Report, which can be downloaded from our website – www.temit.co.uk.
 

IMPORTANT INFORMATION

This material is intended to be of general interest only and should not be construed as investment advice. It does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of Templeton Emerging Markets Investment Trust PLC (“TEMIT”). TEMIT is an alternative investment fund (“AIF”) for the purposes of the UK AIFM Directive and is incorporated as a public limited Company in Scotland.

Opinions expressed are the author’s at publication date and they are subject to change without prior notice. Investments in shares in TEMIT should only be made on the basis of the Investor Disclosure and Key Information Documents, accompanied by the latest available audited annual report and the latest semi-annual report if published thereafter.

Shares in investment trusts are traded on a stockmarket. The share price of investment trusts fluctuate in accordance with supply and demand and may not reflect the value of underlying net asset value of the shares.

TEMIT shall not be liable to any user of this material or to any other person or entity for the inaccuracy of information or any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission. Any opinions expressed are the author's at publication date and they are subject to change without prior notice. Any research and analysis contained in this material has been procured by TEMIT for its own purposes and is provided to you only incidentally. Data from third party sources may have been used in the preparation of this material and TEMIT has not independently verified, validated or audited such data.

There is no guarantee TEMIT will meet its objective. The value of shares in TEMIT and income received from it can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future performance. An investment in TEMIT entails risks. In emerging markets, the risks can be greater than in developed markets.

Investment trusts may borrow money in order to make further investments. This is known as 'gearing' and can enhance shareholder returns in rising markets but, conversely, can reduce them in falling markets. The majority of charges will be deducted from the capital of the company. This will constrain capital growth of the company in order to maintain the income streams. TEMIT may use financial derivatives or other instruments which entail specific risks more fully described in the company's documents.

TEMIT invests in the equity securities of emerging markets companies. Emerging markets have historically been subject to significant price movements, often to a greater extent than more established equity markets. As a result, the share price and net asset value of TEMIT can fluctuate over time. Performance may also be affected by currency f luctuations. For details of all the risks applicable to TEMIT, please refer to the Key Information Document, Investor Disclosure Document and the Principal and Emerging risks sections in the Annual Report. These documents can be found on our website: https://www.temit.co.uk/resources/literature or can be obtained, free of charge from the address below. TEMIT shares are not registered, marketed or promoted to US Persons. Shares of TEMIT are available for sale on the London and New Zealand stock exchanges.

References to indices are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. Indices are unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. lAll index data is provided “as is.”

The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited. © 2026 Morningstar, Inc. All rights reserved. You will find more information at www.morningstar.com

Franklin Templeton Investment Trust Management Ltd (registered in Scotland SC460631) is the Alternative Investment Fund Manager to Alternative Investment Funds.

Issued by Franklin Templeton Investment Management Limited (FTIML), Cannon Place, 78 Cannon Street, London EC4N 6HL. FTIML is authorised and regulated by the Financial Conduct Authority. Information about TEMIT can be found on the TEMIT website https://www.temit.co.uk

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