T. Rowe Price maintains a cautious and selective strategy in its artificial intelligence-related deployments, focusing on the resilience of corporate fundamentals rather than simply following market trends. According to Li Zhaojian, Chief Portfolio Analyst for Equities and Multi-Asset at the firm, AI remains a significant structural theme in global markets. While AI is expected to continue serving as a potential structural driver for corporate earnings in North Asia over the coming years, the firm avoids overconcentration at the portfolio level. Instead, it prioritizes companies with sustainable competitive advantages, technological leadership, and strong balance sheets to benefit from both AI trends and broader non-AI growth drivers.
In Asia, sectors highly sensitive to the AI theme are primarily concentrated in North Asian semiconductor and hardware industries. South Korea and Taiwan Province of China are key beneficiaries of global AI capital expenditure influencing emerging market equities. However, the structure of AI benefits in emerging markets differs significantly from that of U.S. tech stocks—focusing more on advanced chip manufacturing and related infrastructure rather than software and platforms. Despite this, Asian tech stocks remain highly correlated with global economic growth and AI investment cycles. Any short-term decoupling in correlation is more likely a reflection of market catalysts rather than a fundamental shift in relationships.
From a market perspective, South Korea shows higher sensitivity to changes in AI demand, particularly given the ongoing tight supply of high-bandwidth memory (HBM). Taiwan Province of China holds a strategic position in the global supply chain, especially in advanced semiconductor foundry services. In the Chinese market, large platform companies have recently underperformed as capital rotates toward stocks perceived as more directly benefiting from AI. Overall, Chinese equities exhibit lower correlation with global AI leaders, with their performance more influenced by domestic policy direction, platform economy dynamics, and internal demand conditions. As a result, market divergence remains pronounced, and returns may not closely track global semiconductor capital expenditure cycles. Additionally, the macroeconomic environment continues to show signs of fragmentation.
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