In an interview with this news service, Qian Zhang, investment specialist in the emerging markets client team at Scottish-based investment manager Baillie Gifford, highlighted the benefits of investing in undervalued emerging markets, driven by tech.

In an interview with this news service, Qian Zhang at Scottish-based investment manager Baillie Gifford, highlighted that emerging markets had been underperforming developed ones until recently. They outperformed developed ones in 2025, driven by a weaker US dollar, stronger relative earnings revisions and improving return on equity (ROE). Corporate governance has also been improving in the region.

However, the conflict in Iran sent oil prices to new highs, sparking inflation risks, strengthening the dollar, and making emerging market assets and oil importers vulnerable, yet they have remained relatively resilient. Like a number of wealth managers, including Edmund Shing at BNP Paribas Wealth Management, Zhang believes that the conflict will make governments focus on ensuring energy security and the transition towards renewable energy.

Together with other wealth managers, Zhang thinks that emerging markets are solving some of the biggest problems in the world, such as artificial intelligence and energy. “AI is designed in the US but it is manufactured in Asia, notably Taiwan and Korea,” Zhang told this news service in an interview.

Zhang, who joined Baillie Gifford in 2021, is a native Mandarin speaker and emerging market specialist, with expertise in China. She previously worked as a senior client portfolio manager covering emerging markets strategies at Pictet Asset Management and JP Morgan Asset Management.

Korea is big on semiconductors, Zhang said, who has investments in South Korean-based Samsung Electronics. It is the largest global producer of DRAM chips which has benefited from the price increase of DRAM and NAND flash memory chips – driven by demand for generative AI. She is also invested in South Korean chip maker SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) which supplies Nvidea with chips. This was also emphasised by Ben Durrant, portfolio manager of Baillie Giffords Emerging Markets Growth Fund, at Baillie Gifford’s recent round table in Edinburgh .

Zhang, who drew attention to the rising middle class in Asia and emerging markets, stressed the importance of being diversified in portfolios to remain resilient. She is overweight in Brazil and Korea due to semi-conductors and in Taiwan. She is slightly overweight in China and underweight in India.

Baillie Gifford Emerging Markets Growth Fund
The fund aims to outperform (after deduction of costs) the MSCI Emerging Markets Index, by at least 2 per cent per annum over rolling five-year periods. The manager believes this is an appropriate target given the investment policy of the fund and the approach taken by the manager when investing. In addition, the manager believes an appropriate performance comparison for this fund is the Investment Association Global Emerging Markets Sector.

The fund aims to invest in an actively managed portfolio of emerging market stocks. It invests on a long-term (five-year) perspective, and has a strong preference for growing companies, founded on the observation that returns follow earnings over the long term in emerging markets. The portfolio typically holds between 60 to100 stocks.

Top holdings include South Korean-based Samsung Electronics, South Korean chip maker SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) as well Chinese tech multinationals Tencent and Alibaba. Top countries include China, Taiwan and Korea, and top sectors semiconductors and tech hardware.