Why AI is driving the current emerging markets equity rally

The Beyond Markets podcast channel is wrapping up on a high note at the end of 2025. But do not worry! The conversation continues on our podcast Moving Markets by Julius Baer, where we'll be sharing fresh insights and analysis on current market developments.

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For the first time in five years, emerging market equities are outperforming their developed market peers. But what’s driving this rally? Interestingly enough, this boom is driven by a rather small number of stocks, mainly located in North Asia.

In this episode of the Beyond Markets podcast, Nenad Dinic, Emerging Market Equity Strategist and Manuel Villegas, Next Generation Research Analyst, discuss with Ayako Lehmann why emerging market equities are having this strong run, to what extent developed markets are highly dependent on AI components coming from Asia and whether the usual commodities and macro factors that used to be the key drivers of EM equities have lost their importance or not and what this all means when it comes to diversifying a global portfolio.

• (00:11) - Introduction
• (00:54) - What drove past emerging markets equity rallies?
• (01:48) - What exactly has changed now?
• (03:02) - Is Asia matching the U.S. AI boom?
• (05:36) - Will Asia soon lead AI markets?
• (08:16) - Where is the U.S. & China story going?
• (11:07) - Will the shift in EM from commodities to tech remain?
• (16:12) - Is portfolio diversification with EM still relevant?
• (21:40) - Do we remain constructive on AI globally?
• (24:40) - Closing remarks

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