Three asset managers pitch emerging markets as the AI cycle's next call

Latin America: from consumption to investment

Morgan Stanley's chief Latin equity strategist Nick Lipman, speaking October 15 on the bank's Thoughts on the Market podcast, argues the region is turning a corner: "We've long argued that Latin America is moving from a consumption-led economy towards an investment-led cycle." Brazil is the missing piece — but unlocking it depends on fiscal reform, because, as Lipman puts it, "Brazil remains one of the world's most expensive places to invest" — with high government debt and elevated rates making fixed income more attractive than equities or entrepreneurial risk. m:…8259

The AI buildout is the demand engine in his framework: Morgan Stanley's global framework suggests annual capital spending could rise from roughly $2.5 trillion to about $5-6 trillion as companies build AI infrastructure. "Data centers need electricity. Electricity requires energy infrastructure. And the infrastructure requires copper, lithium, and other critical minerals." The region's endowment is large — Latin America holds roughly 60% of the world's lithium resources — and Lipman says Brazil and Argentina are increasingly functioning as energy and agriculture exporters comparable to Texas. m:…8259

EM debt: the firmest footing in a decade

Wellington's Gillian Edgeworth makes the debt case — with a caveat worth stating plainly: her piece is a 2026 midyear outlook republished October 16, so read it as supporting evidence that's fresh to this feed rather than breaking news. Her core claim: "EM fundamentals are stronger than they have been in a decade." Countries in IMF programs, including Ecuador, Egypt, El Salvador, and Argentina, carry primary balances nearly three percentage points of GDP above their long-term averages, and sovereign credit upgrades have significantly outnumbered downgrades in recent years. m:…0880

The supporting history: many EM central banks tightened ahead of developed-market peers in 2022, building credibility; meanwhile their commodity endowment — "in particular metals needed for semiconductors and artificial intelligence" — boosts export growth while pulling both China and the U.S. into deeper economic engagement. The counterweights she names: U.S. twin deficits and limited appetite for fiscal adjustment, and the risk that large U.S. AI investments feed persistent inflation that forces Fed tightening. m:…0880

EM's AI supply chain: hardware, platforms, operators

Baillie Gifford slices EM AI exposure three ways: hardware enablers like TSMC, Accton, and Silergy; software platforms such as Tencent and Kuaishou; and operational innovators including MercadoLibre and Nubank. The throughline: "you can't tell the story of AI without emerging markets." Training and running large language models are, in the firm's words, demanding industrial processes enabled by Asian technology — from TSMC's datacenter semiconductors to Accton's high-end switch platforms and Fabrinet's fibre optics helping AI server clusters avoid gridlock. m:…6444

The platform and operator layers get specific: Tencent threading AI through the WeChat ecosystem; Kuaishou's Kling 2.0 video-generation model drawing a creator base; MercadoLibre's fraud detection approaching 99% accuracy on flagged items; Nubank rolling out generative tools in customer service and financial advice. The scale argument comes via PwC's estimate that AI could add $15.7 trillion to global GDP by 2030 — and the firm's own exposure: a little over a quarter of the referenced portfolio is tied to AI hardware and its immediate enablers, with TSMC a holding since 2005. m:…6444