Asia tech space is best way to play AI right now, says HSBC's Alastair Pinder

The EM trade has flipped. Higher commodity prices and AI capex are creating a massive bifurcation. Long LatAm commodity exporters (Brazil/Chile) and Asia tech (DRAM/semis), which is the purest AI play. Short commodity importers (ASEAN/India) and structurally challenged DM like Europe. Capital is rotating out of Europe into select EMs with superior fiscal positions. The UK's fundamentals are now worse than most EMs.

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emerging markets cautious up

HSBC 8.5
Investment Bank $1686.00B
Alastair Pinder 9.0

Asia tech space is best way to play AI right now, says HSBC's Alastair Pinder

Speaker2

Introduces Alistair Pinder and asks about the impact of global inflation on emerging markets.
Alistair Pinder

Higher inflation, oil, and commodity prices are massively bullish for Latin America. HSBC is overweight Brazil, playing aluminum and copper trends in Chile. DRAM and semiconductors are also commodities benefiting from AI capex ($900B), with 20% going into memory, making Asia tech the best way to play AI.
Speaker2

Asks if Alistair remains bullish on Brazil after the EWZ ETF pullback.
Alistair Pinder

Remains bullish on Brazil but selective. Inflation reduces likelihood of rate cuts, but energy and materials space in Brazil is very attractive.
Speaker2

Notes that historically higher rates were a death knell for EM, but now EM is at all-time highs due to memory and Taiwan Semi weightings. Asks if he is worried about the 3.5% underperformance of EEM due to the 25bp rise in 10-year yield.
Alistair Pinder

You have to be selective. ASEAN and India are punished by inflation (oil importers, consumer squeeze). India also disrupted by AI, not benefiting. However, EM fiscal and current account positions are much stronger than developed markets like the UK, which is worse than most EMs. This is new for EM.
Speaker2

Asks if capital is rotating from UK/Germany to Brazil and other EMs.
Alistair Pinder

Money continues to rotate into select EMs, out of areas like Europe (oil/gas importers) into less impacted areas. A global rotation out of international markets into EM is happening.

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