A weaker U.S. dollar and rising interest rates – driven by inflation and fiscal concerns – have boosted the appeal of emerging-markets banks, according to Fidelity Portfolio Manager Sam Polyak, helping the category overcome past headwinds from currency volatility and low interest rates.
“For years, these lending institutions – operating in dynamic economies where growth potential is high, but challenges are equally pronounced – struggled to maintain profitability,” explains Polyak, who manages[the emerging-markets holdings within Fidelity® Total International Equity Fund (FTIEX). “This constantly evolving landscape makes it all the more important to emphasize well-managed, fundamentally strong firms in underappreciated regions of the world.”
In helming the emerging-markets equity strategy since 2019, Polyak employs a growth-at-a-reasonable-price approach to target businesses benefiting from long-term secular drivers.
“Against a generally more favorable backdrop for emerging-markets banks, I’ve been able to purchase several of these stocks that I’ve had my eye on for some time but had previously avoided due to valuation reasons,” says Polyak.
As an example, he cites Bank Central Asia, Indonesia’s largest private lender. Renowned for its operational excellence, Polyak believes it is one of the best-run financial institutions in emerging markets. As of April 30, 2026, the fund held shares of the company despite sluggish economic growth – both domestically and abroad – weighing on loan growth and dampening investor sentiment toward bank stocks overall.
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Recent political developments in Indonesia have added further complexity, he says, noting that in September President and former general Prabowo Subianto reshuffled key economic and security ministers amid public unrest over rising living costs and lawmakers’ perks.
“While some market participants understandably feared a return to a late-20th-century military dictatorship, I considered these concerns overstated and took the opportunity to build exposure to the stock,” Polyak explains.
Elsewhere, Al Rajhi Bank – one of Saudi Arabia’s largest lenders – also reflects the potential within emerging-market banking, says Polyak. Headquartered in Riyadh, the firm has more than 500 branches across Saudi Arabia, Kuwait, Jordan and Malaysia.
Here, Polyak established a position after the shares had underperformed, primarily due to softness in crude-oil prices.
“As I see it, both Al Rajhi Bank and Bank Central Asia have strong underlying deposit bases and solid franchises,” he concludes. “My hope is that over time, these fund holdings will demonstrate the merits of patience – allowing valuations to settle to more reasonable levels rather than chasing them.”
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Sam Polyak is a portfolio manager in the Equity division at Fidelity Investments.
In this role, he is responsible for FIAM Concentrated Emerging Markets strategy and serves as manager of Fidelity Advisor Emerging Markets Fund and VIP Emerging Markets Portfolio.
Prior to joining Fidelity in June 2010, Mr. Polyak was a principal, co-portfolio manager at Ninth Wave Capital Management from 2007 to 2009, where he was a founding partner of the long-only and long-short Emerging Markets Equity fund. Previously, he worked as head of emerging markets (EM) research at Oppenheimer Funds from 2005 to 2007, and as a co-portfolio manager, head of EM research, and analyst at Pioneer Investments from 1998 to 2005. He has been in the financial industry since 1998.
Mr. Polyak earned his bachelor of arts degree in finance from the University of Massachusetts Amherst and his master of business administration degree in finance from New York University Leonard N. Stern School of Business. He is also a CFA® charterholder.