UBS: Continue trading AI narratives rationally, maintaining overweight position in China.

UBS Global Emerging Markets Equity Chief Strategist Sunil Tirumalai recently released his annual strategy, stating that global economic growth is expected to rebound starting from early 2026, with all the benefits of fiscal expansion in developed markets likely to be reflected. The expansion of the Federal Reserve's balance sheet and the accumulation of stablecoins have kept long-term yields under control. As companies with ample balance sheet space continue to make huge investments, investments in technology/AI are expected to continue. "We are currently in the early stages of the technology/AI cycle, and the overall environment is nearing its peak in the next 1.5-2 years." He believes that the current micro situation is healthy, with AI investment funds coming from cash flow, companies making large investments having low leverage, and valuations not exceeding those of other markets. In emerging markets, approximately 23% of the index are identified as beneficiaries of AI, contributing over 42% of the return in 2025. It is expected that the earnings per share growth of AI stocks in 2026 may remain above 20%, returning to normal in 2027. In general, continuing to trade the AI narrative is reasonable. Sunil Tirumalai also mentioned, "We are more optimistic about Chinese companies. They are unique consumer-oriented AI stocks in emerging markets, and their valuations have not risen too much. MSCI China remains our major overweight market in larger markets."