Qian Zhang, Investment Specialist for Baillie Gifford, joined Keith Black, Managing Director of RIA Channel, to discuss the growing opportunity and demand in emerging markets, particularly in Asia.
Baillie Gifford just launched an Emerging Markets ETF (BGEG), a high-conviction portfolio designed to identify leading growth companies across a diverse range of industries and regions. Zhang notes that while demand for emerging markets is increasing, investors are still underweighting the sector. However, as emerging markets evolve, she finds that this mindset is shifting, with the sector well positioned for the next growth cycle.
Zhang notes that the emerging market index has become dominated by North Asia, including China, Taiwan, and South Korea, where economies are investment grade and externally well-buffered. She adds that Asia will see significant middle-class growth within emerging markets, with that demand increasingly being met by domestic companies rather than imported Western brands.
Zhang highlights key opportunities in AI infrastructure and commodities. For example, she notes the most affordable and efficient copper producers are largely in emerging markets, which will play a critical role as copper supply is forecasted to be 30% short of demand by 2040, while new data centers are expected to need 1% of global copper production.
Baillie Gifford is a privately owned investment management firm with expertise in emerging markets going back to 1908, supported by a net annual outperformance of more than 300 plus basis points over 32 years.
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