Despite strong equity markets, the narrowness of the rally and investors’ focus on a small group of perceived AI “winners” and “losers” have created opportunities in less high-profile markets and sectors.

Emerging Market equities have traded at a discount to developed markets for much of the past two decades. Political risk, economic volatility, slower growth in some countries and a different sector mix explain part of that gap. Corporate governance explains another part.

We believe the current environment is particularly conducive to identifying undervalued securities that are being overlooked or indiscriminately marked down by a market focused on the short term.

While the long-term outlook for AI remains compelling, the increasing reliance on external financing, elevated valuations and unprecedented market concentration suggest investors should distinguish between AI’s structural opportunity and the cyclical risks embedded in current expectations.

Investors appeared willing to look through the geopolitical uncertainty and refocus on corporate earnings. However, rather than illustrating broad market resilience, this rebound has been propelled by a limited number of Artificial Intelligence (AI) related stocks.

This quarter’s market advance has been remarkably narrow, concentrated in a small number of technology focused stocks — a marked contrast to the rally at the start of 2026, which saw a notable broadening of returns.