Artificial intelligence (AI) is reshaping economies and industries globally. According to Abrdn, “We’re now at the inflection point, with the emergence of the likes of ChatGPT bringing AI to the general consumer.”  Moreover, the asset manager considers the advent of AI in emerging markets to be a huge opportunity. 

“This leap in technology allowed EM countries to bypass the need for widespread, expensive communications infrastructure. This led to a profound impact on productivity and connectivity,” opines the asset manager. It also highlights how AI has connected several countries, even the rural areas, that were previously disconnected.

Pruksa Iamthongthong, Investment Manager at Abrdn, indicates that data centres are also positioned to shift from providing storage to offering computing power, thus creating sizeable opportunities for businesses in the sector. “Generative AI is tipped to revolutionise several industries, with applications ranging from automating mundane tasks like minute-taking in meetings to groundbreaking innovations in healthcare,” says Iamthongthong.

According to Abrdn, due to the massive increase in data traffic, companies will need to extend the channels, while the data switches would have to be efficient enough to manage the enhanced load. “This example is indicative of a broader long-term structural trend for technology supply chains in which EM companies play a crucial role,” informs the asset manager.

Iamthongthong further says, “Shifting focus from the supply chain to companies that can harness AI tools, we must consider the potential distribution of AI’s created value.” She highlights that with the increased accessibility and adaptability of AI in emerging markets, its benefits are likely to spread across industries and companies of all sizes.

On China, Abrdn specifically contends that the nation’s more muted growth in recent years can be reignited by the enhanced productivity demonstrated by AI. However, the asset manager is concerned about the impact of US tightening chip exports to China. “While the short-term effects may be softened due to adequate inventory levels, the long-term picture is more complex. Should the export restrictions persist, it may hinder China’s ability to keep pace with AI developments due to technological gaps,” opines the asset manager.

Iamthongthong sums up that while export restrictions and supply chain issues can pose short-term challenges, the quest for local innovation positions emerging markets for long-term success in the AI era.

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