Investment funds in emerging markets are heading to seize artificial intelligence opportunities, with some investors expecting that increasing technology spending will enhance returns over the coming years.
Pointing for the success of the Chinese developed company for artificial intelligence and the leading semiconductor companies in Asia, asset managers such as the “First Spring Global Incontins” and “GIBASIT Management” began to focus their wallets more on artificial intelligence shares. This trend proved its success, as artificial intelligence companies were the 6 largest contributors to the rise of the Bloomberg Index for the arriving markets of the emerging markets this year.
“This trend may last between 10 to 20 years,” according to Alison Shimada, head of the stock division in the emerging markets in the “Spring”, which oversees the assets of $ 611 billion. “It will be a radical impact on local peoples in emerging markets.”
Although the investment rush towards artificial intelligence is largely focused on a limited number of Silicon Valley companies, companies in emerging markets that can harness technology or provide them with basic components have begun to benefit significantly. For example, artificial intelligence servers have become the main driver of growth for Hun Hai Presentation in Taiwan, known as “Foxconn”.
The six most contributing companies include the rise of the Bloomberg Index for the arriving markets of the emerging markets this year: TSMC, “Tennisent”, “Ali Baba”, “Samsung Electronics”, “SK Hynix” and Xiaomi, which combined 37% of the index.
According to the stock strategy at City Group, the shares associated with artificial intelligence in emerging markets so far outperformed the known group of the “Seven Greats” of huge technology companies.
“You cannot invest in emerging markets without an optimistic and positive vision of what artificial intelligence developments can lead to corporate profits,” said Konal Disai, co -manager of the Global Emerging Markets portfolio in London in London.
Desai pointed out that Taiwan and South Korea will be two basic companies for the emerging market story during the next three years, while Malaysia, China, India, parts of Latin America, and the Middle East will achieve “inappropriate gains” due to its exposure to artificial intelligence applications and data.
He stressed that his fund has invested in the shares of artificial intelligence during the recent market declines, expecting that a third of the returns in emerging markets will come from these shares in the coming years.
Indicators show that momentum will continue with the acceleration of artificial intelligence in multiple sectors that include cloud computing and electric vehicles. The average estimates of technology companies’ profits in emerging markets increased over the next 12 months by 15% since the beginning of the year, compared to only 6% for emerging stocks in general.
“The share of artificial intelligence will continue to grow from this point onwards, adding: the rise of artificial intelligence and technology opens new horizons for long -term growth, especially in North Asia,” said Chengtn Yu, the emerging market strategy of UPS Global Wilde Management.
The growing dependence on artificial intelligence may contribute to enabling the shares of emerging markets to overcome one of the fundamental challenges, which is weak profits growth. Data collected by “Bloomberg” showed that the results of companies have remained without expectations every quarter since the early 2022, when the MSCI index companies failed to emerging markets in achieving profit expectations by more than 12% combined.
However, the profits of the IT sector companies, which represent the backbone of artificial intelligence, have been identical to expectations since the fourth quarter of last year, which strengthened the confidence of the investors. Young Jay Lee, the first investment manager at the “Bite for Asset Management”, said: This sector is expected to grow at an accelerated pace and will continue in the future, stressing that artificial intelligence will remain a pivotal sector within emerging markets, “said Young Jay Lee, First Investment Director at the Bite of Asset Management.