Fragmented Markets, Shifting Supply Chains and AI Alpha: The New Playbook for Investors
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“In a world which is fragmented today, the origin of supply suddenly matters. Companies need control over the opportunities tied to their supply chains, and that’s driving both the surge in demand and the push to diversify away from China, not just for geopolitical reasons, but for cost as well.”
In an era where global investment decisions, are shaped by supply-chain disruptions and technological breakthroughs, Arjun Divecha, Senior Advisor and Former Head of Emerging Markets Equity at GMO, set the tone for a candid exploration of where the global markets are headed, at the 16th India Investment Conference hosted by CFA Society India and CFA Institute, the global association of investment professionals.
In his session “Beyond the US Equity Bubble: Opportunities in Emerging Markets, Supply Chain Shifts, and AI-Driven Alpha” Divecha explored how supply-chain realignments are creating fresh opportunities in emerging markets, particularly as companies diversify operations away from China. “These shifts are not just incremental; they are structural,” he noted, emphasizing that countries with favorable demographics and supportive policies are poised to benefit.
Divecha also delved into the potential of AI in fundamental research, arguing that artificial intelligence is a complement, not a substitute, for human judgment. Demonstrating live examples, he showed how AI can sift through extensive datasets, generate investment insights, and even back-test strategies efficiently. “AI will not take your job; someone who knows how to use AI well will,” he quipped, underscoring that the value lies in directing these tools effectively rather than relying on them blindly.
The discussion touched on macro trends and market valuations, including the US market’s relative undervaluation and the influence of capital flows on asset prices. Divecha stressed that while flows and momentum can affect short-term market movements, long-term structural fundamentals remain the true driver of returns. He also addressed political and regulatory risks in emerging markets, highlighting how active management allows investors to navigate uncertainties that passive strategies might overlook.
The global and regional investment outlook was further enriched during the Q&A session moderated by Rajeev Thakkar, where Arjun Divecha addressed audience questions on market valuations, geopolitical risks, and emerging opportunities. Responding to queries about India, Divecha highlighted the balance between growth potential and valuation discipline. “As a value investor, the challenge is people often overpay for good stories. Growth is part of value, but our focus remains on the underlying reality today rather than future expectations,” he said, noting that structural shifts such as the move away from China and the diversification of supply chains create compelling opportunities in Asia. Countries like Indonesia, he observed, are well positioned to benefit from these trends, provided political and regulatory risks are actively managed.
Divecha also reflected on the challenges of short-term forecasting, emphasizing that while capital flows and market momentum can influence prices in the near term, long-term structural fundamentals drive returns. Drawing on historical context, he noted that U.S. markets in 2000 were inexpensive but delivered negative real returns over the next decade, while emerging markets yielded roughly 7% per year in real terms. This, he argued, underscores the value of a patient, disciplined investment approach.
On the role of technology in investing, Divecha reiterated that AI and other tools are complements, not substitutes, for human judgment. Demonstrating how systematic frameworks can harness large datasets to identify opportunities, he advised that structured, disciplined use of technology provides a competitive edge. “There is no secret sauce, systematic, structured approaches deliver results over the long run,” he noted, highlighting that transparency and rigor in valuation are critical, especially in volatile or overextended markets.
The session concluded with a broader reflection on investor strategy in emerging markets, where active management allows flexibility to navigate regulatory and geopolitical uncertainties. Across discussions, a clear theme emerged: disciplined valuation, awareness of macro and structural trends, and intelligent use of technology remain central to capturing opportunities in today’s complex global investment landscape.
Held in Mumbai on 9 January 2026, the India Investment Conference brought together over 600 investment professionals in attendance along with a stellar line-up of speakers including Paul Moody (Managing Director, Global Partnerships & Client Solutions, CFA Institute), Joachim Klement (Head of Strategy, Economics & ESG, Panmure Liberum), Viktor Shvets (Global Strategist & Author), Ajit Ranade (Economist), Prashant Nair (National News Editor, CNBC‑TV18), Vikas Khemani, CFA (Co‑founder & CIO, Carnelian Asset Management & Advisors), Chirag Setalvad (Head – Equities, HDFC Mutual Fund), and Prashant Khemka (Founder, WhiteOak Capital Group).
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