US asset-management firm T. Rowe Price said on Thursday that supply-constrained bottlenecks and continuous specification upgrades are those key areas offering the investment opportunities along China’s artificial intelligence supply chain.
Agnes Ng, portfolio specialist for emerging markets and Chinese equity strategies pointed out that capacity shortages in areas such as substrates, printed circuit board materials could actually support the pricing power and margin potential.
She further highlighted the importance of looking beyond broad market benchmarks. "As new technologies reshape industries and create new leaders, active stock selection becomes increasingly important.”
Meanwhile, the global macro backdrop is likely to continue to be driven by a sustained AI investment cycle and ongoing geopolitical tensions in the second half of this year. Both forces are inflationary, said Shen Wenting, global investment solutions strategist and portfolio manager.
“Within equities, we are overweight US equities given its advantage as a net energy exporter and its sizable exposure to Al-related companies. We also kept an overweight in emerging markets equities, where we see diverse and compelling opportunities,” added Shen.
While T. Rowe Price does not expect major central banks to aggressively hike interest rates, there are concerns that markets may be underestimating the risk that inflation proves more durable, according to Vincent Chung, co-portfolio manager for the diversified income bond strategy.
He mentioned a preference for shorter-duration fixed income exposures, including high-quality global high yield bonds and select emerging market credits, which offer attractive income potential while reducing sensitivity to rising inflation and interest rates. Inflation-linked bonds can also play an important role as a portfolio diversifier.
