Emerging markets may be on the rise again as the artificial intelligence (AI) "super-cycle" accelerates in Asia.
Jason Hsu, chief investment officer and founder at Rayliant, joins Market Domination to discuss the potential impact of trade tensions and the future outlook for these markets.
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We've had this whole big discussion about the US as not as many perhaps investors as interested in the US, international markets have been starting to gain a little bit of steam here. So before we get to sort of some specific ideas within emerging markets, talk to me first of all, big picture, how you think about the emerging markets right now versus investing in US or into other developed markets for that matter.
Yeah, so I would say for the last 15 years, right? If you believed in international diversification, bought into the EM growth story, you'd be hating yourself right now, right? Because the US absolutely trumps emerging markets. But there was a 10-year prior to that where EM outperformed the US by 9% per annum for about 10 years running. I think that cycle is coming back. So for those who are under diversified to EM, to US home country bias, I think this is time again to look at EM. I think the big AI super cycle and starter super cycles, deploying hardware everywhere. Asia has always been hardware, and that's led by EM Asia.
Let me ask you, Jason, just, I'm curious. What if on this trade fight, this tariff fight, Trump really hasn't retreated at all. What if he's really just called a truce. It's like a temporary reprieve. He just built a little window in where he'll try to punch through this tax bill and as soon as the tax bill gets punched through and he doesn't see G and others giving him the kind of concession he wants, he just brings down that tariff pain all over again. Would that change your outlook on EM?
Yeah, so if somehow President Trump is more of a purist when it comes to having no trade deficit, then I think it's quite scary, right? I think this is bad news for Asia. But I don't think he's that, right? He's very practical. I think he's moved on from the trade war, right? He is now in Middle East, telling everyone, everyone in Middle East loves me. They're kissing my butt. They're giving me airplanes and big deals and buying points. You know, I think he's way past.
He was in his element, Jason, no doubt.
He was awesome. Yeah, so I think he's moved on and he doesn't want to drag out this fight with she because he realizes he probably doesn't get very much from all that work. So I am really not very concerned that we're going to go back to it to a round two.
