Baillie Gifford Sees Tech-Driven Upside in Emerging Markets

The shift in sentiment is largely fueled by the critical role Asian manufacturers play in the AI supply chain. While the United States leads in AI design, the actual production occurs in hubs like Taiwan and South Korea. Zhang highlights major holdings such as Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing Company (TSMC) as primary beneficiaries of the skyrocketing demand for DRAM and NAND flash memory chips. These firms are not merely passive participants but are central to the infrastructure powering modern generative AI.

Market resilience remains a key theme, even as regional conflicts in Iran threaten to reignite inflation and tighten the dollar. Zhang suggests that such pressures are forcing governments to prioritize energy security and accelerate the transition toward renewables. Within her current strategy, she maintains an overweight position in Brazil, Korea, and Taiwan, while opting for a more cautious, underweight stance on India. Her approach relies on a long-term, five-year horizon, focusing on 60 to 100 stocks where earnings growth is expected to drive sustained returns. By emphasizing diversification, the firm aims to outperform the MSCI Emerging Markets Index by at least 2 percent annually, betting that domestic middle-class expansion and technological dominance will outweigh macroeconomic turbulence.