Emerging markets opportunities amid AI and energy transition (with Heidi Stroud-Watts)

Asks if the latest headline trading on US-Iran deal is substantial.

Heidi Stroud-Watts

Alison Shimato

Markets have been looking beyond the Iran war for a month. Like Ukraine conflict, markets always want to go up. I'm positioning for what goes beyond lowering oil price because both sides want a negotiated end.

Asks about interesting opportunities in EM.

Heidi Stroud-Watts

Alison Shimato

AI has been the overriding theme this year, reasonably valued. Entire supply chain is in EM: Korea, China, Taiwan. Energy infrastructure is interesting - need for alternative energy, grid buildout, energy storage. Asian tech companies are well positioned, including India.

The war proves people need to look for alternative sources of energy.

Asks if China is undervalued.

Heidi Stroud-Watts

Alison Shimato

Absolutely. Taiwan being largest country in EM index hasn't been seen for a long time. China could come back strongly. I never bet against countries with high intellectual and financial capital. China is looking very cheap with impetus to come back.

Asks what she likes in mainland China.

Heidi Stroud-Watts

Alison Shimato

Underweight consumer areas due to slow recovery. Like larger branded companies like Midea that could be global competitors. Also industrial, airplane leasing - very lowly valued.

Asks if China is still the anchor within EM.

Heidi Stroud-Watts

Alison Shimato

EM doesn't move forward unless China moves forward. Near-term AI obsession has focused on Taiwan and Korea, but those countries have moved strongly and need a break. People will rotate to China and India.

Asks about India.

Heidi Stroud-Watts

Alison Shimato

India has been ignored for two years, it's expensive but financialization of savings is prominent. Like capital market stocks, some banks, auto sector, and energy infrastructure.

Asks about dollar outlook.

Heidi Stroud-Watts

Alison Shimato

Expect dollar to slowly decline due to US credibility issues and lack of confidence in government. People are looking for hard assets and diversification away from US.

US has been a very loved market for the better part of a decade.

Asks about Brazil and Poland.

Heidi Stroud-Watts

Alison Shimato

Brazil is interesting - advanced in fintech and industry, large young population. Political headwinds are known. Poland is anchored by strong government, large industrial and defense budget.

Asks if tariffs are still a factor.

Heidi Stroud-Watts

Alison Shimato

Tariffs are on the back burner. Markets overcome retracted tariffs quickly. Markets have been volatile but are acting rationally now.

Asks if oil price pressure has dulled outlook for ASEAN.

Heidi Stroud-Watts

Alison Shimato

ASEAN is at risk. There's a divide between countries with commodity access and those without. Indonesia, Thailand, Philippines have difficulties. Philippines has governmental issues, lack of confidence in Indonesian government, but Thailand may be turning with new government.

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