{"text":[[{"start":5.2,"text":"The writer is chair of Rockefeller International. His latest book is ‘What Went Wrong With Capitalism’"}],[{"start":11.850000000000001,"text":"It’s hard to recall a time when global markets were so obsessed with a single storyline. The AI boom is now so powerful and widespread in nature that it is overwhelming all other drivers of returns and shaping a new AI-based world order."}],[{"start":28.950000000000003,"text":"The relative performance of the world’s major stock markets over the past year can be explained by how much exposure they have to AI. Nations with a large foothold in the “stack” of industries developing AI infrastructure and services are massively outperforming, while those without are lagging by record margins. The winners include the US and China, thanks above all to their foundational AI models; Taiwan and South Korea on the strength of chip manufacturers; Japan and Israel on a broad array of AI skills."}],[{"start":59.1,"text":"The partial winners are secondary suppliers. They include nations that are exporters of circuits, servers and other AI-related electronic hardware — such as Mexico, Thailand and Vietnam — or that play a role in the AI stack as both exporters and sizeable bases for data centres, such as Malaysia and Singapore. "}],[{"start":77.9,"text":"The losers include much of Europe, with the odd exception (the Netherlands is a major supplier of advanced chips from one big company). Worst off are those countries that lack “AI plays” and rely heavily on the industries most exposed to disruption, including IT services."}],[{"start":95.85000000000001,"text":"In the US, AI plays constitute more than 40 per cent of the market cap and have accounted for more than 80 per cent of the returns this year. The return and concentration profile is similar in Japan and even more extreme in South Korea and Taiwan. In China, all the action is taking place in newer growth-oriented segments of the market, while the old-economy sectors struggle. Meanwhile, the likes of India and the Philippines, which are perceived to be at the wrong end of the AI-wrecking ball, are well in the red this year."}],[{"start":127.95000000000002,"text":"While the internet frenzy of the late 1990s was also an overpowering global phenomenon, it was not so narrowly focused. The leading tech subsectors back then were communications equipment, semiconductors and wireless telecom services, which accounted for 60 per cent of global market gains at the dotcom peak in early 2000. So far this year, the three leading tech subsectors (semiconductors, hardware and electronic equipment) have contributed a significantly larger share of global market gains, over 70 per cent. "}],[{"start":161.05,"text":"Also, unlike the dotcom peak, when tech-fuelled returns were spilling across industries and markets, today they are sucking money away from non-AI industries and nations. Even in the US, investment outside of the tech sector is declining in real terms. Meanwhile, foreigners keep pulling money out of countries seen as peripheral to the AI boom, from the UK to Indonesia."}],[{"start":183.15,"text":"Global investors may be focused almost exclusively on AI, but they are not choosing winners at random. The leading AI nations are long-established tech powers with a deep commitment to R&D, spending more than 3 per cent of GDP on average — over three times the level of lagging countries. They also invest heavily in technology, with tech spending averaging 3.7 per cent of GDP among AI winners, compared with 2.7 per cent for partial winners and 1.6 per cent for losers."}],[{"start":214.4,"text":"To be sure, no leader’s position is secure. In the US, the performance of the dominant Mag 7 tech stocks is increasingly diverging, with three up, three down and one flat for the year, while all face some form of foreign competition, often from China."}],[{"start":229.6,"text":"In China, giants such as Alibaba and Tencent are still trying to determine how to profit from AI and are down around 30 per cent this year. The real AI momentum in China is with newer tech companies, often listed on secondary boards that are much better known to local than to foreign investors, such as ChiNext; it is up 35 per cent for the year."}],[{"start":251.6,"text":"In Japan, market leadership has shifted sharply towards tech over the past year, with semiconductors up 200 per cent and computer memory pioneer Kioxia rising by 3,500 per cent to become the nation’s single largest stock."}],[{"start":267.5,"text":"The AI booster effect continues to help power many economies through one crisis after another, from the tariff war to the Iran oil shock. Expectations for GDP growth have risen by nearly a full percentage point for the AI winners since the start of the year, while falling significantly for the losers. In countries like the US, Taiwan and Korea, the large gains in advanced manufacturing, the associated surge in profits and the wealth effect from the AI-led stock market gains keep lifting economic growth. In countries like China, Thailand and Mexico, tech exports are rising rapidly enough to offset weakness in other parts of their economies, including domestic demand."}],[{"start":307.95,"text":"In short, it’s an AI-driven world. Of course, this monomania will not last for ever. The speculative enthusiasm will fade even as the technological revolution endures and expands in scope. As was the case following the railroad boom of the 19th century and the internet craze at the turn of this century, a more balanced global market will eventually re-emerge. But so long as investors continue to see AI as the sole foundation of the next world order, they will keep ranking nations based on their tech prowess."}],[{"start":348,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782715736_5946.mp3"}