Dubai: For UAE investors holding global stocks, the latest selloff in artificial intelligence-linked companies raises a question: where can they find opportunities without depending heavily on a handful of technology giants?
Fund managers are looking towards emerging markets, where lower valuations, higher dividend yields and businesses less exposed to AI spending are attracting interest.
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The selloff exposed the concentration of emerging-market benchmarks. South Korea's SK Hynix and Samsung Electronics, together with Taiwan Semiconductor Manufacturing Co. (TSMC), account for almost 30% of MSCI's main emerging-market index.
Their declines pushed the benchmark to a seven-month low on Friday before it recovered. The index trades at around eight times expected earnings, less than half the S&P 500's multiple, while offering roughly twice the dividend yield, Bloomberg-compiled data show. Its low valuation partly reflects sharply higher earnings forecasts for AI companies.
"Many non-tech sectors and markets in EM offer stronger long-term growth than their US counterparts, at significantly more attractive multiples," Maxence Visseau, Chief Investment Officer at Dubai-based Arkevium Capital, told Bloomberg.
Here are six areas attracting investors seeking alternatives to AI-heavy portfolios.
1. India: An alternative to AI-heavy Asian markets
India is attracting investors seeking to reduce exposure to semiconductor stocks.
