AI, Energy and Robotics

Three Things We Are Watching

Artificial Intelligence Regulation: During Chinese President Xi Jinping’s state visit to the United States, the two sides did not announce joint rules for regulating artificial intelligence (AI) models but agreed to continue discussions on AI risks and benefits, as well as establish an incident-communication channel. China is likely to strengthen its oversight of domestic AI models, while taking care not to stifle innovation. To facilitate this Beijing may, in the coming months, selectively ease import restrictions on older Nvidia Blackwell GPUs purchases by leading Chinese platform companies. For now, the United States maintains the AI advantage, but China continues to close the gap. Our investment focus is on whether improved access to computing translates into commercially valuable applications and sustainable earnings.

Rising Energy Prices: Almost 90% of the MSCI Emerging Markets Index, by weight, represents economies classified as net oil-and-gas importers.¹ Rising energy prices have sparked protests in economies with limited fiscal flexibility, weaker ties to exporters offering discounted oil, or insufficient oil-storage capacity. However, those economies which have benefited from discounted oil supplies are at risk of US sanctions and oil storage is a finite resource. As borrowing costs also rise, these pressures reinforce the case for selective allocation rather than a uniform view of emerging markets. We favour companies with resilient cash generation, manageable debt and valuations that adequately compensate for these risks.

Chinese Robotics: Chinese humanoid robots have been gaining increasing attention. Our focus in Chinese robotics is on commercial viability rather than technological demonstrations alone. China has introduced a national standards framework for humanoid robots and embodied AI but translating that framework into consistently applied technical and safety standards remains an important implementation challenge. We are monitoring warehouse automation, healthcare assistance and industrial robots, assessing whether applications deliver measurable productivity gains at acceptable cost. Rather than treating service robots and humanoids as opposing categories, we distinguish applications with demonstrable customer value from those whose economics remain uncertain. Investment conviction will depend on reliability, repeat orders, deployment costs and a credible path to profitable growth.

See more: When the Company Changes Before the Client

Market Review

Emerging market equities declined modestly in September but outperformed developed markets outside the United States. Higher US Treasury yields, a stronger dollar and renewed Middle East tensions weighed on sentiment, while AI-related companies and commodity producers offered support. Asian markets were mixed. Taiwan and South Korea benefited from semiconductor, memory and AI demand, but remained volatile. China stayed subdued despite policy support, as weak consumer demand and mixed industrial data offset selective interest in technology. Brazil advanced, while Mexico and South Africa declined.

Outlook

We remain positive on EM stocks. A key reason is continued spending on AI. We continue to see opportunities related to this theme, particularly in Asia. Many EM companies play an important role in building the technology that supports AI.

AI has attracted a lot of attention, but it is not the only source of returns for EMs. Local economies also have their own growth profiles. We are also observing more companies focusing on capital discipline and improving their shareholder return policies. Overall, EM stocks remain well placed for the future.

Bassel Khatoun, Senior Managing Director

Endnotes

Source: MSCI. Brazil, Saudi Arabia, the UAE, Kuwait, Qatar, Malaysia, and Colombia are classified as net oil exporters, other are net importers.  Data as of August 31, 2026. The MSCI Emerging Markets Index captures large and mid cap representation across emerging markets countries. Indexes are unmanaged and one cannot invest directly in an index.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Equity securities are subject to price fluctuation and possible loss of principal.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Investments in companies in a specific country or region may experience greater volatility than those that are more broadly diversified geographically.

The government’s participation in the economy is still high and, therefore, investments in China will be subject to larger regulatory risk levels compared to many other countries. There are special risks associated with investments in China, Hong Kong and Taiwan, including less liquidity, expropriation, confiscatory taxation, international trade tensions, nationalization, and exchange control regulations and rapid inflation, all of which can negatively impact the fund. Investments in Hong Kong and Taiwan could be adversely affected by its political and economic relationship with China.

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