Dollar Decline vs Market Concentration: Henry Greene on Emerging Markets Tech & the Next AI Winners

In this episode of Lead-Lag Live, I sit down with Henry Greene, Investment Strategist at KraneShares, to discuss how a weakening U.S. dollar and global AI capital spending could reshape leadership in technology markets.

From Taiwan and South Korea’s semiconductor dominance to China’s growing AI innovation ecosystem, Greene explains why emerging markets technology may offer exposure to the same growth themes investors love in the U.S. — but with lower multiples and broader diversification.

In this episode:
– Why dollar weakness is a tailwind for emerging markets
– How Taiwan and Korea benefit from AI CapEx
– China’s role in large language model innovation
– The case for diversifying beyond top-heavy US tech
– How KEMQ captures emerging markets technology exposure

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Transcript

Why Go International

SPEAKER_00 0:00

So why should investors consider diversifying internationally? It's because you get kind of you get access to a different dynamic uh when you go international. It's not quite as top-heavy. If you're thinking about risks of the US market, um, it's good to be in markets that have a lower correlation with the US, right? So specifically, um, China is a good example of this. Very low correlation with the United States um markets. And also in China has this AI technology innovation ecosystem almost on par uh with the United States. So when you look at China, for example, you're looking at investing in those same exciting tech and growth themes that you would look for in the United States.

Asia’s Role In The AI Supply Chain

Dollar Path And EM Tailwinds

SPEAKER_01 0:49

So it's my birthday, and this year I'm celebrating by giving a special gift away to one of you. And if you officially wish a happy my birthday to you, I've had this tote with a few surprises from our signature Food merch portfolio. And it's not just random merch. Inside, you'll find some items that really at least signal you know exactly what you're doing in these markets. And the tote, well, it won't hedge your portfolio, but it will make you look smarter than anyone pretending they know what risk on means at the grocery store. If you want it, here's what you need to do. Follow Lead Leg Report on X, follow Mela underscore Schaefer on X, subscribe to Lead Live Media on YouTube, and like and share this video. Only one person gets the toe, but since everyone gets our content, it's really a happy my birthday to all of you. I'm your host, Melanie Schaefer. Welcome to LeadLive Live. According to a recent Financial Times report, the next phase of the AI boom may not be driven by US hyperscalers alone, but by the semiconductor and advanced manufacturing ecosystems across Asia that are actually building the infrastructure behind it. At the same time, there's growing discussion around the path forward for the US dollar and whether policy signals around domestic manufacturing and reshoring could lead to more competitive currency. Today, we're talking about what that means for emerging markets and technology with my guest, Harry Green, investment strategist at Crane Shares. Henry, it it's great to have you here.

SPEAKER_00 2:28

Hi, Melly. Thank you for having me. It's great to be here.

EM Tech Outperformance In 2025

SPEAKER_01 2:32

So thanks, Henry. And so to kick things off, if the US dollar does stabilize or if it weakens from here, how significantly could that tailwind be for emerging markets technology firms?

SPEAKER_00 2:46

Sure, yes. So uh just by way of introduction, I'm an investment strategist at Crane Shares. We specialize in emerging markets, ETFs, uh, and alternatives as well. And so, yeah, to answer your question, um, I think it's a significant tailwind uh for emerging markets. I think it's already been a significant tailwind for emerging markets. So in 2025, we saw a real shift happen where uh following about a decade of pretty consistent uh strong dollar returns, dollar rising, right, we see a significant dollar decline in 2025, about 9% if you look at the Bloomberg dollar index, which is a trade-weighted basket of US major trading partners currencies versus the US dollar of the exchange rate there. So call it a 9% drop overall in the US dollar. That's pretty significant. It's been a long time since we've seen that significant drop in the US dollar. And yeah, that really means that you know when you're buying a company, if you're buying a stock in emerging markets, uh you the the revenues of that company are denominated in their local currency, and they're just worth more in dollar terms if you're a US dollar investor, right? So sometimes that doesn't necessarily directly uh lead to higher equity returns, but we did see that in 2025. You saw emerging markets uh outperform the NASDAQ, and you saw specifically technology uh within emerging markets outperform both broader merging markets and the NASDAQ in 2025 quite significantly. And we see that as a continuing trend uh perhaps for the next uh five to ten years.

SPEAKER_01 4:20

Henry, which emerging markets do you see benefiting the most from the world global surge in AI CapEx?

SPEAKER_00 4:27

Sure. So AI CapEx, uh when people think about AI CapEx, they mostly talk about Nvidia, right, and uh the US, uh, as you mentioned, hyperscalers, semiconductor makers, and those are the so those are chip designers, right? And they actually contract out the actual manufacturer of these chips in many cases, two companies like TSMC, so that's Taiwan Semiconductor Manufacturing, uh, and SK Heinex, that's in South Korea. Um, and those are the two major beneficiaries of uh this AI CapEx uh when it comes to the actual chip manufacture. And we've seen them benefit from a multiple uh increase recently, right? We've seen their stock prices rise um significantly, but they're still trading at a lower multiple than uh Nvidia is, for example, in a lot of the US names, uh, whose CapEx in many cases is going directly uh to these firms. Uh so we look at it from our uh KEMQ, uh, that's Crane Shares Emerging Markets Technology ETF. Um and we look at that portfolio, um, yeah, the semiconductor that these chipmakers have done uh have outperformed uh in the portfolio, and so we're we're looking at that closely. Um a lot of these are in um emerging markets because South Korea uh is still an emerging market, right? And so is Taiwan, um, right? So Japan is not included because technically, according to MSCI, it's not an emerging market. Um, but Taiwan and Korea are the major beneficiaries uh of that capex, yeah.

From Middle Class Story To Innovation

SPEAKER_01 6:03

Okay, uh and then it's so what about the shift as well? Because I mean, like we often hear about emerging markets referring to ram consumption and the middle class, but how has that sort of shifted now towards innovation and technology leadership uh in recent years, especially?

SPEAKER_00 6:18

Sure, yeah. Um so I think this this emerging markets middle class growth story is still there. Um I think that you know you've seen strong growth, especially in Vietnam uh last year, um, and a number of countries, especially Asia. Um so that story is still there. I think it's just been overshadowed by uh really AI development, um, right? And you see countries in emerging markets. So I mentioned um Taiwan and Korea, but also China. Um, you're seeing them really stand out in terms of innovation, uh, in especially in the large language model space. Um that's includes like Alibaba's QN model is one of the top globally, top used globally. Uh some global corporations we've seen actually preferring uh to use uh the QN model as opposed to, let's say, Chat GPT uh or another of the US um uh alternatives, right? And because they see it's more customizable, has certain features that they can apply. So, anyway, um this we've really seen, especially in China, um, where China's innovating in this space, where the growth in China is now coming from a lot from innovation and not just that kind of demographic dividend that we've seen over the past 10 years. Again, that's still there. I think in China it's kind of asleep right now because consumer confidence remains low, but it's just been overtaken by this incredible technology story in AI. Now, it's limited though, because not every, I mean, it's it's limited to literally probably those three countries, maybe one or two more that I haven't mentioned, are benefiting from that AI story. So when you think about emerging markets as a whole, yeah, I mean, a lot of countries, you're still looking at that, you want to see that that middle class spending growth. Um, and that's what's gonna drive um growth in those markets. Um, but then, you know, in these three countries, so again, mainly China, Taiwan, uh, Korea, um, it's it's really become a technology story, yeah.

SPEAKER_01 8:21

Yeah, and so talking about the technology, I mean you you talked about sort of the different countries, you talked about uh the the language models. What other technologies do you see as being the most critical to emerging markets specifically rather than to the developed economies?

Profit Cycles And Chipmaker Moats

SPEAKER_00 9:11

Sure, yeah. I think payment networks and payment technology is really crucial in a lot of emerging markets, a lot of developing countries are still cash societies even today. Um, and we see that changing. Um, it's funny, I was recently in Vietnam, just last year, um, and they're going through this shift right now that China went through uh a few years ago, uh and which is going straight from cash to you know mobile payments, right? Um and that's really important in emerging markets. I think more so than developed markets, because we're pretty used to using our credit cards and then put a credit card and Apple Pay, right? And that's basically the same payment infrastructure. But in emerging markets, you have this opportunity to actually upgrade the payment rails and have an entirely new structure, which is what happened in China, and we see that happening elsewhere. Um and there are certain firms that are poised to benefit. Um, there's um a firm in uh Latin America called Pago Seguro, they're innovating in payments as well as well as general e-commerce firms are also tend to be very involved in payment systems. So I think that's an important technology in emerging markets. Um and then outside of that, I think um, you know, just generally upgrading um uh electricity uh infrastructure and telecommunications infrastructure will be very important. I think more energy coming from uh whether it's renewable sources or just more energy, you know, these countries are gonna need a lot more energy to power um whether it's AI systems, payment systems, internet systems, right? And so I think just that physical infrastructure is very important in emerging markets. Again, we've seen China as a leader in that uh in their development, and they have a much lower cost of electricity uh in general than the US and Europe. And I think that's another theme uh we'll see in emerging markets is um where they can develop this infrastructure properly, uh, you could actually see a lower cost uh potentially of energy, right? And then that may attract people to put uh outsource actual data centers um in countries other than uh where uh their users are. So I think that could be an interesting uh phenomenon.

SPEAKER_01 11:26

Yeah, and and then so we're you know, in terms of this technology and where that these countries are in the development process, where are they within the profit growth cycle and and sort of what's driving the improvement in fundamentals uh across those country those companies?

Diversifying With EM Tech Themes

SPEAKER_00 11:41

Sure. So uh if we look at the chipmakers, um, so again, that's you're gonna have uh TSMC, Taiwan, which is in Taiwan, SK Heinex in Korea. Um uh you're seeing that they had, you know, they kind of got the brunt of this um where the market said, okay, you have to justify your um multiple, right? Uh pretty early on. Um and they continue to be um at least their stock price is trading at uh lower multiple than their US uh counterpart or their their where the CapEx is coming from. Um and so that's really important to remember for those shipmakers. And so we've seen this kind of cycle where um you had actually EPS revisions coming, EPS expectations coming down for a couple years and then coming back up uh recently for these uh companies and across emerging markets technology as a whole. We look at it as a whole. Um, you know, we're seeing improved um profit expectations um and growth expectations um for specifically for the chipmakers, but also for other technology firms that are related to the AI space. Um, you know, it's a very pro it tends to be a profitable business. Um, it's also very uh it's a little more stable than because if Nvidia, you know, comes out with a new um chip, right, that has certain features, and then those features end up either being uh outcompeted by uh competitors or are not as relevant as the company, again, Nvidia, which is a designer of chips, if they're not don't end up being as relevant as Nvidia thinks they will be, right? That's significant risk for the profitability of that product. Whereas uh wholesale, uh rather, you can think of it as like um kind of private label manufacturers like TSMC don't have that problem because they're paid uh to make uh the chips on behalf of a designer, right? So that's really kind of they have, and they really have a moat in this as well. So you have that kind of de-risking from where they're not taking the product risk. And then you also have a significant moat because there are very few companies and very few places, honestly, on earth that have the skill sets and the skilled workforce. I mean, again, it's a very specific skill, it's not the high-level design skill, and it's not a low-end manufacturing skill. It's right, it's it's a middle skill that is to uh be doing these high-end chip manufacturing. Um, and that's very rare and hard to find. Certainly hard to find here in the United States. We've seen, you know, uh people in the political arena uh trying to change that here. That'll take a long time. So these companies have very significant motes uh for their businesses and they're taking less product risk. So when I look at profitability risk to profitability, I'm definitely uh favoring um chip makers like TSMC and SK Heinex over um uh the US uh maters right now.

SPEAKER_01 14:44

And Henry, what why should investors consider diversifying outside of the US and and where in particular should they look?

Portfolio Construction With KEMQ

SPEAKER_00 14:51

Yeah, so um, you know, US markets have over the past 10 years uh on a rolling annual basis have outperformed in almost every single year. Um and so with the declining US dollar, we're seeing a major potential decade-long shift to where emerging markets may begin to outperform, uh, supported by uh a weakening dollar. Um and so when you look at the US market, yes, investors have done very well, but it's become very concentrated. Um you have, I believe it's 40% of the S P 500's uh market cap weight uh is in uh its top 10 holdings, top 10 constituents, right? And so people will argue whether or not that's actually a problem. Um, but at the end of the day, you've had you've you you now have a very top-heavy market uh in the US that's focused on these large cap technology stocks that have done, again, done very well, probably will continue to do very well. So why should investors consider diversifying internationally? Um it's because you get kind of you get access to a different dynamic uh when you go international. It's not quite as top-heavy. Um and if you're thinking about risks of the US market, um, it's good to be in markets that have a lower correlation with the US, right? So specifically, um, China is a good example of this. Very low correlation with the United States um markets. And also in China has this AI technology innovation ecosystem almost on par uh with the United States. So when you look at China, for example, you're looking at investing in those same exciting tech and growth themes that you would look for in the United States. And so when you want to look in internationally and you want to look specifically at emerging markets, um, right, which again, because of this dollar story, may continue their performance. Um, we uh think that you don't actually have to invest in in different uh industries or different themes. You can still find these tech, these, these brilliant tech technological innovation and AI themes, um, as well as internet spending, rising internet spending in emerging markets. Um, and you can access those themes uh in emerging markets. You don't have to, you know, uh leave the US uh and no longer invest in technology, but you can invest in technology within emerging markets. And we uh run an ETF uh with the ticker KEMQ, that's the Crane Shares Emerging Markets Technology ETF. Um and it really allows you to do that. It allows you to take those same growth themes uh that uh that people are loving in the US right now and applying it to emerging markets. And so we think that's a really good opportunity for investors to diversify.

SPEAKER_01 17:36

Yeah, and so can you talk a little bit about portfolio construction then and how advisors or uh investors should be looking at that?

Who Buys The Tech And Where

SPEAKER_00 17:44

Um sure. So uh in KEMQ, um we take a holistic view of uh emerging markets technology. Um specifically, we originally the fund was concentrated on the internet theme, and we recently expanded it to also include um uh hardware as well. Um, just realizing that um, you know, with the AI story becoming more relevant, um we need to actually capture the um chipmakers and and people involved, uh, companies involved in the AI ecosystem because it's very relevant to internet as well. Um so that's been a change in our portfolio construction. Um a lot of people know our famous uh K Web, KWEB, China Internet ETF. Um, and so KMQ is largely applying the K Web thesis to broader emerging markets, um, but also in again including these um hardware companies as well. We think that's really important in in today's market. And then with regard to portfolio construction, I think that um we look at about um, you know, we we we're still very bullish uh uh on the the the US technology market. Um and so, you know, I would consider adding uh a smaller uh portion of your portfolio, but not an insignificant one to uh uh international uh stocks. Um we think that uh emerging markets um looks very good right now just because they benefit more from the uh the dollar decline than developed markets, and also the multiples are a lot lower than developed markets uh with uh higher growth. So um, yeah, I would consider um taking some of, I mean, if if you've done well uh in the US market, that's great. I think it's worthwhile to look at taking a small piece of that um uh exposure and and and moving it into emerging markets to increase your overall portfolio diversification, um, as well as access uh arguably the next leg of and the downstream uh impacts of those growth themes that you're probably already invested in.

SPEAKER_01 19:55

Going back then to what I asked uh you know a couple questions ago, uh who are who's the main consumer of of this technology? Is is it still the middle class?

Vietnam’s Consumer Boom And KPHO

Where To Find Research And Updates

SPEAKER_00 20:03

For the chipmakers, it's it's global demand uh for chips. It's uh it's all over. I mean, um a lot of it's driven in the US and a lot of developed, and it's mainly for export uh right to developed markets. And then, yeah, I think that the the growing middle class and emerging markets, so that's kind of like a separate theme, right? So you kind of have the like we said earlier, right? There's two themes going on right now in emerging markets. One is this technological innovation that's limited to some top countries. And then more broadly speaking, uh you still have this it's the growing middle class theme, uh, right. And yeah, they um, I think will consume more and more um chip technology and and AI technology as time passes, um, as their incomes rise. Um, but right now we're we're looking for that theme, you just look at consumption on an absolute basis. Um, I think the greatest example right now is Vietnam. Uh Vietnam had the highest, uh, I believe the highest uh GDP growth in 2025 in the Asia-Pacific region. Um and they are seeing just this consumer boom on a lot of fronts. Um and it's it's it's just you look at um what the local companies are and who's who are their consumers, right? And it's mainly um, you know, it's a lot of fast-moving consumer goods, um, even like specialized food products and like you know, real economy stuff here, right? That's just gonna grow uh in its consumption, right? So that's an interesting. We actually have an ETF for Vietnam now, uh just launched, KPHO. Um, so you can check that out. Um and so that's an interesting story. Yeah, and on the technology side, I think it's more about um so for KEMQ, again, that's our emerging markets technology ETF, it's more about you're getting um on one hand this technological innovation, but on the other hand, the the what we like to call the transmission engines of spending, uh, of rising consumer spending, rising spending by that middle class in emerging markets. And that's mainly um uh e-commerce firms um like Alibaba or Mercado Libre in Latin America, um, and then uh payment firms um and other uh internet services.

SPEAKER_01 22:20

Yeah, Henry, and I mean you're talking about uh KEMQ and the the new ETF that you just launched. You guys put out uh uh you and your team put out a ton of uh the content and research around the different ETFs, so what's going on uh globally, where Where can investors and advisors go to find out more to read the research and to contact your team?

Closing And Subscribe Prompt

SPEAKER_00 22:39

Sure. So people can go directly to our website. That's craneshares.com. And there you'll be able to find all of our products by theme as well as all of our research. And you can actually sign up for our research newsletters there as well. And then you can also go to our chief investment officer, Brendan Ahern, runs a daily note on specifically on China's capital markets called China Last Night. That's ChinalastNight.com. So you can subscribe to that for either weekly or daily updates, specifically for capital market updates on China. And I think those would be your best resources to get the latest from crane shares.

SPEAKER_01 23:25

Awesome. Well, Henry, I always always appreciate your time and thanks for joining me. Thanks to everyone for watching. Be sure to like, share, and subscribe for more episodes of Lead Light Live.