Fund managers explore alternatives ranging from Indian equities and Chinese healthcare to Latin American banks.
Dubai: For UAE investors with exposure to global equities, the latest selloff in artificial intelligence-linked stocks has raised a key question: where can they find opportunities without relying too heavily on a small group of technology giants?
Fund managers are increasingly looking towards emerging markets, where lower valuations, stronger dividend yields and businesses with less exposure to AI-related spending are drawing investor interest.
The recent selloff has highlighted the concentration of emerging-market benchmarks. South Korea’s SK Hynix and Samsung Electronics, along with Taiwan Semiconductor Manufacturing Co. (TSMC), account for nearly 30% of MSCI’s main emerging-market index.
Their declines pushed the benchmark to a seven-month low on Friday before it staged a recovery. The index is trading at around eight times expected earnings, less than half the valuation multiple of the S&P 500, while offering roughly twice its dividend yield, according to Bloomberg-compiled data. Its relatively low valuation partly reflects sharply higher earnings forecasts for AI-related companies.
“Many non-tech sectors and markets in EM offer stronger long-term growth than their US counterparts, at significantly more attractive multiples,” Maxence Visseau, chief investment officer at Dubai-based Arkevium Capital, told Bloomberg.
Here are six areas attracting investors looking to diversify away from AI-heavy portfolios.
1. India: An alternative to AI-focused Asian markets
India is emerging as an option for investors seeking to reduce their exposure to semiconductor-heavy markets. The NSE Nifty 50 rose 2% on Friday, recording its strongest weekly performance since 2021, even as several other Asian markets fell.
Foreign equity inflows were on course to reach a weekly record, despite Indian stocks trading at higher valuations than many of their emerging-market peers.
“The no-brainer anti-AI trade should be India,” said Bing Yuan, a fund manager at Edmond de Rothschild, who recently increased her exposure to the market.
“If you want to switch out from AI, it should be a candidate,” she told Bloomberg.
For UAE investors with Indian equity holdings, the appeal lies in gaining exposure to the domestic economy rather than companies directly tied to the semiconductor cycle. Yuan remains cautious about India’s IT services sector, while relatively high market valuations remain a factor to consider.
2. China and Hong Kong: Dividend-paying stocks
Some fund managers are turning to companies listed in mainland China and Hong Kong that offer attractive dividend yields, rather than increasing their exposure to technology stocks.
Sat Duhra, a portfolio manager at Janus Henderson Investors, said he had been adding higher-yielding shares, pointing to “improving payout discipline”.
“Just hogging three or four names and being really concentrated actually doesn’t work over the long term,” Duhra told Bloomberg.
“There’s a whole bunch of other areas outside of AI that have worked really well, and that’s where we positioned.”
For UAE investors looking for regular income, dividend-paying companies offer an alternative to businesses whose valuations depend largely on expectations of future earnings growth. However, dividend sustainability and potential share-price fluctuations remain important considerations when assessing overall returns.
3. Chinese healthcare: Finding growth beyond technology
Healthcare companies are drawing attention from investors seeking growth opportunities outside the semiconductor industry.
Yuan holds Chinese healthcare stocks, including BeOne Medicines and Wuxi Biologics Cayman. BeOne has gained 37% in 2026, while Wuxi Biologics has climbed 58%, according to Bloomberg.
Their performance highlights how strong investment returns have also emerged beyond AI-linked stocks. For UAE investors, the healthcare sector offers exposure to pharmaceutical research, drug development and industry-specific demand. However, the sharp gains recorded by these companies could also mean higher entry prices for new investors.
4. Latin America: Opportunities in banks, utilities and mining
Latin American equities are attracting investors with their relatively low valuations and exposure to commodities, financial services and infrastructure.
Malcolm Dorson, senior portfolio manager at Global X Management, said he had been increasing allocations to copper and gold miners, utilities and banks.
“Latin America is another region that presents minimal AI exposure, deep value, and commodities,” Dorson told Bloomberg.
“Brazil’s volatility has left it with an extremely low bar for outperformance.”
Brazilian stocks fell sharply after President Luiz Inácio Lula da Silva’s unexpected re-election victory over Flavio Bolsonaro, who was seen as more market-friendly.
For UAE investors, mining companies offer a way to gain exposure to commodity markets, although returns remain dependent on factors such as production costs and individual company performance. Banks and utilities provide different sources of earnings, but also carry political and economic risks.
5. Consumer goods and telecommunications: Looking beyond AI spending
Consumer-facing businesses and telecommunications companies are also attracting fund managers seeking to diversify away from technology stocks.
Robert Naess, a portfolio manager at Nordea Investment Management, has been shifting investments towards these sectors. His purchases include Chinese sportswear maker Anta Sports Products and Taiwanese computer hardware company Getac Holdings.
“I believe AI will have a major impact on the global economy, but that does not necessarily make AI stocks the best investments going forward,” Naess told Bloomberg.
For UAE investors whose international funds are heavily weighted towards technology, these businesses offer exposure to alternative revenue streams. However, their performance remains linked to consumer demand, competitive pressures and broader operating conditions.
6. Central and Eastern Europe: Opportunities in financial stocks
Banks and financial services companies across Central and Eastern Europe are also drawing investor interest, supported by relatively attractive valuations and less direct exposure to AI infrastructure spending.
Fund managers see potential in businesses whose earnings are driven more by domestic economic activity and financial services demand than by the semiconductor industry.
For UAE investors looking to broaden their geographical exposure, the region offers another avenue into the financial sector. Currency fluctuations, interest-rate changes and local economic conditions remain key factors to consider.
What UAE investors should consider
The recent market volatility underlines why investors need to look beyond a fund’s geographical label and examine its underlying holdings. An emerging-market fund may appear diversified but still have significant exposure to a small number of semiconductor companies.
When comparing international funds, investors should review their largest holdings, sector allocations, valuation levels and dividend policies to understand how concentrated their portfolios are.
Currency exposure is another consideration. As the UAE dirham is pegged to the US dollar, fluctuations in other currencies can affect the value of overseas investments when converted back into dirhams.
Emerging markets also carry risks, including political uncertainty and regulatory changes. Recent market disruptions in Turkey, Indonesia and Brazil show that moving away from AI stocks does not necessarily protect investors from volatility.
For UAE investors, the goal is not simply to replace technology shares with other assets. It is to build genuine diversification across companies, sectors and markets, rather than relying on a handful of AI-linked stocks
