Mainstream Online Web Portal
LoginInvestors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.
Who are the real beneficiaries of the AI acceleration in emerging markets
Pendal senior fund manager JAMES SYME explains why investors need to look more deeply into the AI acceleration to find the true beneficiaries in emerging markets
- AI gains concentrate in chip leaders
- Korea shows AI’s uneven economic rewards
- Learn more about Pendal Global Emerging Markets Opportunities Fund
SOUTH Korea’s AI-driven semiconductor boom is creating extraordinary wealth, yet the gains are accruing unevenly across companies, sectors and households, argues Pendal’s emerging markets team.
The principal beneficiaries are a small number of firms positioned at critical points in the AI supply chain, most notably Samsung Electronics and SK Hynix.
The current cycle highlights a broader global trend in which returns to capital are rising more rapidly than returns to labour. Returns to labour are themselves also highly asymmetric.
Our Korean exposure remains concentrated in the direct beneficiaries of AI-related capital expenditure rather than the broader market.
A lot of the discussion around artificial intelligence has focused on its potential to increase inequality and concentrate economic gains among a relatively small number of companies and individuals.
In emerging markets, however, the AI acceleration is currently being experienced less through the developers of large language models and more through the hardware supply chain that enables them.
As top-down investors, we are interested not only in the scale of this opportunity but also in how its benefits are distributed. South Korea provides an especially useful case study.
Where the AI gains are concentrating
In Korea, the gains from the semiconductor export boom are being distributed unevenly across the corporate sector.
Consensus forecasts point to a sharp rise in profits at Samsung Electronics and SK Hynix over the next two years, while earnings expectations for much of the broader Korean market have improved only modestly.
In US dollar terms, the combined operating profit of the two chip firms was US$41 billion in 2024 and is forecast to be US$389 billion in 2026. For the other 66 MSCI Korea Index constituents with available data, the corresponding, figures are US$130 billion and US$138 billion.
The AI boom appears less like a rising tide lifting all boats and more like a transfer of profitability towards a small number of globally competitive firms.
The distributional effects extend beyond companies to households.
Samsung has announced a deal to pay its 78,000 semiconductor workers bonuses of around US$400,000 each, following a similar deal at SK Hynix.
Not only is this not the pattern at other Korean firms, but even within Samsung the non-semiconductor workers are reported to be receiving only US$4,000 each.
The rewards of the upswing are accruing not simply to successful companies, but to the specific activities and skills most closely tied to AI-related demand.
Similar patterns are increasingly visible elsewhere.
In the United States, the share of economic output accruing to labour recently fell to its lowest level on record.
The early stages of the AI investment cycle appear to be generating substantial returns for owners of intellectual property, productive assets and equity capital, while the growth in broader wages is proving slower and more uneven.
Find out about
Pendal Global Emerging Markets Opportunities Fund
What it means for investors
For investors, this distinction is critical.
Strong country-level growth does not necessarily imply broad-based earnings growth, just as rising corporate profits do not automatically translate into higher household incomes.
Our exposure to South Korea remains concentrated in the direct beneficiaries of AI-related capital expenditure, including Samsung Electronics and SK Hynix.
We remain heavily underweight much of the broader Korean market.
In our view, the key investment question is not whether AI is creating value, but where that value is accruing.
About Pendal Global Emerging Markets Opportunities Fund
James Syme, Paul Wimborne, Ada Chan and Roshni Bolton are co-managers of Pendal’s Global Emerging Markets Opportunities Fund.
The fund aims to add value through a combination of country allocation and individual stock selection.
The country allocation process is based on analysis of a country’s economic growth, monetary policy, market liquidity, currency, governance/politics and equity market valuation.
The stock selection process focuses on buying quality growth stocks at attractive valuations.
Find out more about Pendal Global Emerging Markets Opportunities Fund here
Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.
This report has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426. PFSL is the responsible entity and issuer of units in the Pendal Global Emerging Markets Opportunities Fund ARSN:159 605 811 (Fund). It is not to be published, or otherwise made available to any person other than the party to whom it is provided.
J O Hambro Capital Management Limited (JOHCML) is a wholly owned subsidiary of Perpetual Limited and a related party of PFSL. Pendal Institutional Limited (ABN 17 126 390 627, AFSL 316455) has appointed JOHCML as its authorised representative (Representative number 001280039) under its Australian Financial Services Licence.
It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situations or needs. You should consider whether the information is suitable for your circumstances and we recommend that you seek professional advice.
The product disclosure statement (PDS) for the Fund, issued by PFSL, should be considered before deciding whether to acquire, dispose, or hold units in the Funds. The PDS and Target Market Determination can be obtained by calling 1300 346 821 or visiting our website www.pendalgroup.com.
This report may contain information contributed or prepared by third parties. Any information contributed or prepared by third parties is believed to be accurate as at the time of compilation and is being provided in good faith without independent verification. PFSL does not warrant the accuracy or completeness of any information provided by a third party.
To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. All investing involves risk including the possible loss of principal. No company in the Perpetual Group (Perpetual Group means Perpetual ABN 86 000 430 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital.