5 international markets on fire - and the ASX ETFs to play them

Australian shares have had a respectable year, with the S&P/ASX 200 up 11.5% including dividends. Yet when measured against global peers, our performance doesn’t place us anywhere near the top of the scorecard.

The real momentum is overseas. South Korea’s semiconductor champions are riding the AI wave. U.S. mega-caps continue to dominate earnings and innovation. China’s policy push has reignited interest in its equity markets. Canada is in the middle of a historic gold rush, and Europe’s banks and industrials are finally rewarding investors again.

For local investors, the message is simple: you don’t need to abandon the ASX, but you can’t ignore what’s happening offshore. Diversification today isn’t just defensive; it’s the gateway to growth and some serious momentum investing opportunities.

In this piece, we highlight five international markets that are on fire - and the ETFs and listed funds that give Australian investors direct access to the themes driving them. The performance figures stated are total returns.

1. Canada - Gold shines brightest

Oh, glorious Canada. A land of mighty mountains, unending skies, and infinite lakes.

It’s also home to one of the world’s best-performing value-oriented equity markets, with the S&P/TSX Composite up 23.72% year-to-date, its strongest January-to-September run since 2009, according to National Bank of Canada research.

The drivers? Gold, banks and IT. The TSX Global Gold Index alone has soared nearly 120% YTD, lifting gold miners’ weight in the index to 11% - more than double the long-term average, National Bank says.

At the recent Livewire Live 2025 event, L1 Capital's Mark Landau told investors that Canada is one of the key markets for L1 Capital Gold Fund.

"Names in Canada trade on far more attractive valuations, have better production growth in some cases, and better management teams. The structural demand for gold is almost unstoppable," he said.

That demand reflects central bank reallocation: Western banks hold 65–70% of reserves in gold versus less than 10% for China and India. Watch Landau discuss gold and commodities below (skip to 8:10).

And just like Michael Bublé, crooner of “Haven’t Met You Yet,” the TSX is no one-hit wonder.

Canada’s IT sector has enjoyed a “right place, right time” moment, with Shopify (TSE: SHOP) and Celestica (TSE: CLS) driving a 25% YTD rally on the back of AI adoption. Meanwhile, the “big five” banks are defying a sluggish domestic economy with bumper dividend growth, up nearly 24% this year.

Layer in Ottawa’s pivot toward reindustrialisation and energy investment, also highlighted by National Bank, and Canada suddenly looks far more than just a resources play.

How to play it:

• ASX option: Betashares Global Gold Miners Currency Hedged ETF (ASX: MNRS) - invests in 46 gold mining companies, with nearly half listed on the TSX. The fund is up 118.57% year-to-date.

• International option: Unfortunately, there’s no broad Canadian market ETF on the ASX. However, for those with an international trading account, the iShares MSCI Canada ETF (NYSE: EWC) offers exposure to more than 80 Canadian blue-chip stocks and has mirrored the TSX's YTD returns.

2. South Korea – The chip-fuelled phoenix

Ah, South Korea. A nation of neon skylines, K-pop beats, and world-class technology. After years of underperformance, the KOSPI has surged above 3,400 for the first time, up a staggering 43% this year.

Semiconductors are the story. Citi research notes that Korea, along with Taiwan and the U.S., is one of the three markets most correlated with the Bloomberg AI Index — confirming what investors already know: Korea is at the heart of the AI build-out.

Reform is the other driver. Seoul’s Corporate Value-up Program is designed to boost shareholder returns and governance.

“The Corporate Value-up Program may provide a structural improvement to shareholder returns and corporate governance, potentially narrowing the long-standing ‘Korea discount’," Citi analysts wrote.

Valuations remain compelling. MSCI data shows South Korean equities trading on a P/E of just 12.4 - well below emerging markets (15.41x) and developed markets (22.78x). For investors, that’s a powerful mix of growth momentum and attractive entry points.

How to play it:

• ASX option: iShares MSCI South Korea ETF (ASX: IKO) invests in more than 80 large and mid-cap KOSPI companies, including familiar names like Samsung, Hyundai Motors, and LG Electronics. The fund has rallied 46.2% year-to-date.

3. United States - The innovation frontier

America. Home to Silicon Valley, Wall Street, and a President hell-bent on tariffing everything and then cutting deals. Love it or loathe it, the U.S. remains the single most important driver of global equity returns.

The S&P 500 has gained 13.3% year-to-date, while the NASDAQ 100 is up 17.3%, powered by AI leaders like NVIDIA (NASDAQ: NVDA), Oracle (NYSE: ORCL), Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), and Alphabet (NASDAQ: GOOG). 

While the U.S. isn’t the best-performing market this year, Citi highlights it as the core long-term overweight in its latest strategic asset allocation outlook:

“We remain overweight equities overall, importantly driven by our US overweight … additional upside, from admittedly high valuation levels, will have to be driven by AI, making the US the clearest overweight.”

The Fed’s first rate cut since 2024 gave markets a lift, though sticky long yields remain a drag. Still, earnings resilience is striking. National Bank calculates the forward P/E at ~23x — well above historical norms — with the equity risk premium “deeper in negative territory than at any point in a generation.”

In short, the U.S. market is unstoppable but stretched. Betting against it has been painful, and its heavy concentration in the “Magnificent Seven” makes it a pure momentum play.

For Australian investors, one wrinkle has been FX: unhedged ETFs have lagged in 2025 due to a rising AUD, while hedged versions have shone. Predicting the dollar’s path, though, is notoriously tricky.

How to play it:

• ASX option (broad market): iShares S&P 500 ETF (ASX: IVV)  offers unhedged exposure to the S&P 500; or iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV) for a currency-hedged variant.

• ASX option (tech focus): Betashares NASDAQ 100 ETF (ASX: NDQ) provides unhedged exposure; or Betashares NASDAQ 100 Currency Hedged ETF (ASX: HNDQ).

• ASX option (concentrated growth): Global X FANG+ ETF (ASX: FANG) or ETFS Magnificent 7 ETF (CBOE: HUGE) offer concentrated portfolios of U.S. technology companies.

4. China - The dragon awakens

Oh mighty China. The land of dynasties, megacities, and a billion-strong consumer base. The MSCI China Index has been one of the best-performing major markets this year, up nearly 30%, buoyed by sweeping stimulus, improving liquidity, AI optimism, and a partial rotation out of U.S. equities. 

For investors tracking more accessible benchmarks, the Hang Seng Index has delivered an even stronger return, up 36.4% YTD.

Citi recently upgraded China to overweight, telling clients: 

“Today we add some equity risk in China. There are two separate stories, one related to cheapish AI assets, which are more competitive with U.S. assets than had been previously believed. Second, there is a move of household deposits into equities, which is broader than just tech.”

Liquidity is indeed a tailwind. Citi highlights household deposits shifting from banks into non-bank financials, fuelling equity flows. Meanwhile, M1 money supply is accelerating - historically a strong lead indicator for Chinese stocks.

Layer in government “consumption trade-in” policies and rallies in AI and EV-linked names, and you’ve got a potent cocktail for investor confidence.

How to play it:

• ASX option (broad): iShares China Large-Cap ETF (ASX: IZZ) holds 50 of the largest and most liquid Chinese companies trading in Hong Kong, broadly tracking MSCI China performance.

• ASX option (tech focus): Betashares Asia Technology Tigers ETF (ASX:ASIA) invests in 50 of Asia’s largest technology companies. China, Taiwan, and South Korea dominate the portfolio, which includes Alibaba, Xiaomi, Tencent, and Samsung. The fund is up 41.1% year-to-date.

5. Europe – The old world, renewed (at least partly)

Europe. A land of cathedrals, cobblestones, and centuries of commerce - and, for once, upside surprises.

The EURO STOXX 50 Index, which represents the region’s blue-chip companies, is up 12% year-to-date. But the real action lies beneath the surface. National indices in Spain, Italy, and Germany are each up 20–30%, while European financials have surged more than 40%.

UBS notes that Europe has significantly increased its “quality factor” since the GFC, while still trading at a discount to the U.S. Crucially, Europe also offers one of the most generous shareholder yields globally: ~5% versus ~3% in the U.S.

“Although the U.S. has delivered stronger earnings growth than Europe over the past three years, we expect European growth to re-accelerate in 2026. Against this backdrop, Europe’s superior shareholder yield provides meaningful downside protection and, in our view, skews return potential to the upside,” UBS analysts said.

That sector mix matters. Banks continue to trade near record-low relative valuations, with UBS forecasting ~20% upside over the next 12 months as earnings recover. Industrials, meanwhile, are compounding steadily thanks to structural demand for renewables, infrastructure, and defence.

How to play it:

• ASX options (broad): iShares Europe ETF (ASX: IEU), Global X Euro STOXX 50 ETF (ASX: ESTX), Vanguard FTSE Europe Shares ETF (ASX: VEQ), and Betashares Europe Currency Hedged ETF (ASX: HEUR) offer broad exposure to European equities, but track different indices. ESTX has been the standout in 2025, returning more than 21% including dividends, likely due to its concentrated index exposure.

• International options: For those with U.S. trading accounts, sector or country-specific ETFs such as the iShares MSCI European Financials ETF (NYSE: EUFN) and iShares MSCI Germany ETF (NYSE: EWG) offer targeted ways to play Europe’s financial and industrial themes.

Conclusion

From Canadian miners to Korean chipmakers, American AI giants, Chinese policy-fuelled winners, and Europe’s reborn financial-industrial base, 2025’s hottest equity stories are unfolding far from the ASX.

Citi summed it up best: “We stay overweight equities overall, importantly driven by our US overweight, and now a China overweight.” Meanwhile, UBS highlights the structural uplift in Europe’s quality and shareholder returns, and National Bank of Canada points to the powerful combination of gold, banks, and technology driving Toronto’s rally.

For Australians, the message is clear. Diversification isn’t just about smoothing risk - it’s the ticket to participating in the world’s most explosive growth stories.