From ice age to golden age: Can this sector maintain its world-leading returns?

Please note this interview was filmed on 18 August 2026.

For some investors, emerging markets have earned a reputation for underperformance that has been hard to shake. 

As AllianceBernstein's Sammy Suzuki says, the last decade hasn't been a memorable one for EM:

"We've gone through a decade of what I would call an emerging markets ice age. It's underperformed significantly while S&P has generated tremendous returns. And we've created a generation of investors who feel like that's always been the case."

But that pessimism belies the fact that emerging markets are now in a promising place to deliver again. 

"There are periods where EM has done tremendously well," he says. "Usually those periods start from a point of view of 'EM is a lousy investment', and over the next decade or so, it starts to improve."

"I think we're potentially set up for an EM golden age."

In this interview, Suzuki breaks down how and where that golden age could develop, the headwinds driving it, and the sectors offering the best opportunities.

Plenty of opportunities

It will come as no surprise that recent EM index outperformance has been driven almost entirely by the AI supercycle and, more specifically, three chipmaker stocks - TSMC (TPE: 2330), Samsung (KRX: 005930) and SK hynix (NASDAQ: SKHY).

But that extreme concentration misrepresents the breadth of opportunities across emerging markets, says Suzuki. 

"If you look at the index, there are close to a thousand companies," he says. "There's the other 997, and there are tonnes of opportunities."

And one way to identify the companies offering opportunities is by emphasising boots-on-the-ground research. Suzuki points to one example where customer interviews uncovered a nascent retail investor market in India.

And India has reemerged as a good opportunity in EM, he says, as has China.

"India, for example, is forgotten. Only two years ago, that was the highlight of emerging markets. China still is home to over 600 companies in the index, and there are many good companies in China as well. I think there are tonnes of opportunities."

"In China, there's a lot of upgrading of intellectual property. They are exporting pharmaceutical know-how, they are exporting EVs. They are going to be winners here. And low beta stocks I think are going to be potentially a hero in the next cycle."

But it's the AI "picks and shovels" stocks that remain the prime opportunity, according to Suzuki, and the EM theme he's most interested in owning for the next five years, even if that opportunity is also evolving. 

"At the earlier stages of the AI revolution, everybody was focused on Nvidia and the American companies, but there was very little focus on what I call the picks and shovels companies." 

"All of the manufacturing is done in Asia, and so these companies were highly profitable. They were much more attractively valued. And at the time, they were much less volatile. Now, as the AI trade got extended, the opportunity is shifting within AI."

How AllianceBernstein find the right companies

AllianceBernstein's EM strategy focuses on three factors - quality, stability and price. Given the volatility and risks associated with emerging markets, a strategy that can reduce those impacts can drive better outcomes for investors, says Suzuki. 

"If we can dampen the volatility, that's good for investors," he says. "If you're up 50% and down 50%, you lose a lot of money. 100 goes to 150, 150 goes to 75. You just lost a lot of money. In emerging markets in particular, dampening that volatility helps you make money. It also helps you stay invested during tough periods."

And getting that risk management wrong is one mistake Suzuki believes investors are continuing to make in emerging markets, where the risk-adjusted returns equation is more heightened. 

"Investors need to be much more careful about risk management," he says. "This is much more important in emerging markets, because of geopolitical events and lower transparency. Things that you don't expect can happen."

"The ability to beat the market is only getting harder and harder. We need to calibrate very carefully the odds of being right versus the risk that you're taking."

Managed Fund

AB Emerging Markets Strategic Core Equities Fund - Active ETF

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