{"id":353097,"date":"2025-08-18T02:23:15","date_gmt":"2025-08-18T02:23:15","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/353097\/"},"modified":"2025-08-18T02:23:15","modified_gmt":"2025-08-18T02:23:15","slug":"ai-boom-seen-driving-next-decade-of-emerging-markets-performance","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/353097\/","title":{"rendered":"AI boom seen driving next decade of emerging markets performance"},"content":{"rendered":"

(Aug 17): Emerging-market (EM) funds are pivoting to capture the artificial intelligence (AI) craze, with some investors predicting that booming technology spending will drive returns for years to come.<\/p>\n

Encouraged by the success of Chinese AI developer DeepSeek and Asia\u2019s powerhouse semiconductor firms, asset managers like AllSpring Global Investments and GIB Asset Management are concentrating more of their portfolio in AI stocks. That\u2019s been a winning trade, with AI companies being the six biggest contributors to the rally in Bloomberg\u2019s EM stocks index this year.<\/p>\n

\u201cThis trend could last for the next 10 to 20 years,\u201d said Alison Shimada, head of total emerging markets equity at AllSpring, which oversees US$611 billion (RM2.57 trillion). \u201cThe impact on local populations within EM will be transformational.\u201d<\/p>\n

While much of the AI investment frenzy has focused on a handful of Silicon Valley firms, EM companies that can harness the technology or supply crucial components are benefitting. AI servers, for example, have become the main growth driver for Taiwan\u2019s Hon Hai Precision Industry Co, which is known as Foxconn.\u00a0<\/p>\n

\"\" <\/a><\/p>\n

\"\" <\/a><\/p>\n

The top contributors to Bloomberg\u2019s EM stock index this year are Taiwan Semiconductor Manufacturing Co, Tencent Holdings Ltd, Alibaba Group Holding Ltd, Samsung Electronics Co, SK Hynix Inc,\u00a0and Xiaomi Corporation, together accounting for 37% of the index\u2019s rally.\u00a0<\/p>\n

Emerging-market stocks that are highly exposed to AI have even outperformed the so-called\u00a0Magnificent Seven\u00a0megacap tech firms so far this year, according to equities strategists at Citigroup Inc.\u00a0<\/p>\n

\u201cYou cannot invest in emerging markets without having a sanguine and optimistic view of what this AI story can evolve into, from a corporate earnings perspective,\u201d said Kunal Desai, London-based co-portfolio manager for global emerging markets equities at GIB Asset Management.\u00a0<\/p>\n

Desai said that Taiwan and South Korea will be \u201ccentral drivers\u201d of the EM market story over the next two to three years, with Malaysia, China, India, parts of Latin America and the Middle East seeing \u201cdisproportionate gains\u201d due to their exposure to AI data and applications. His fund has invested in AI stocks during recent market dips, predicting that a third of emerging market returns will come from AI-related stocks in the coming years.<\/p>\n

There are signs that the momentum will continue as AI adoption accelerates across segments, including cloud computing and electrical vehicles. The average estimate of forward 12-month earnings for EM tech stocks has increased 15% since the start of the year, compared to 6% for EM stocks overall.\u00a0<\/p>\n

\u201cThe share of AI contribution from the performance standpoint will only grow from here,\u201d said Xingchen Yu, an emerging markets strategist at UBS Global Wealth Management. \u201cThe rise of AI and tech is creating a new layer of secular growth, especially in North Asia.\u201d<\/p>\n

The AI revolution could help EM stocks overcome a key obstacle: earnings performance. Company results have lagged forecasts every quarter since early 2022, with MSCI EM Index companies collectively missing profit expectations by more than 12%, according to data compiled by Bloomberg.<\/p>\n

But firms in the AI-heavy information-technology sector have consistently met earnings projections since the fourth quarter of last year, boosting investor confidence.<\/p>\n

\u201cThis sector has been expected to grow explosively, and will continue to do so in the future,\u201d said Young Jae Lee, senior investment manager at Pictet Asset Management Ltd. \u201cAI will continue to be a key sector within emerging markets.\u201d<\/p>\n

Uploaded by Liza Shireen Koshy<\/p>\n","protected":false},"excerpt":{"rendered":"(Aug 17): Emerging-market (EM) funds are pivoting to capture the artificial intelligence (AI) craze, with some investors predicting…\n","protected":false},"author":2,"featured_media":353098,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[51,2441,16,15],"class_list":{"0":"post-353097","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-markets","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115047393186111158","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/353097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=353097"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/353097\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/353098"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=353097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=353097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=353097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}