M IdeaAsia EM Equity Strategy | Asia PacificMapping AI Adoption in APACMorgan Stanley Asia (Singapore) Pte.+Daniel K BlakeEquity Strategist Daniel.Blake@morganstanley.com +65 6834-6597 Morgan Stanley & Co. International plc+Edward StanleyEquity Strategist Edward.Stanley@morganstanley.com +44 20 7425-0840 Morgan Stanley & Co. LLCTodd Castagno, CFA, CPAGVAT Strategist Todd.Castagno@morganstanley.com +1 212 761-6893 Morgan Stanley Asia (Singapore) Pte.+Jonathan F GarnerEquity Strategist Jonathan.Garner@morganstanley.com +65 6834-8172 Kristal JiEquity Strategist Kristal.Ji@morganstanley.com +65 6834-6949 Morgan Stanley & Co. International plc+Matias OvrumEquity Strategist Matias.Ovrum@morganstanley.com +44 20 7425-9902 Morgan Stanley & Co. LLCKieran Kenny, CFAResearch Associate Kieran.Kenny@morganstanley.com +1 212 296-5137 Diane Ding, Ph.D.Quantitative Strategist Qian.Ding@morganstanley.com +1 212 761-6758 Full stock list on request:A complete list of Adopters and Enablers is available upon request, please click here if you would like to receive that detail.We drill into the Asia-Pacific results of our global AI mapping survey and see an intriguing mix with a relatively high share of AI enablers and at the same time a higher share of likely protected companies (versus US/Europe). Japan is on the front foot with >53% of coverage seen as beneficiaries. AI Impacts Broadening in 2024: AI-accelerated tech disruption will remain a central theme in 2024. We recently concluded a mapping of our global coverage to identify companies that our analysts see as enablers and/or adopters, those likely protected and those potentially disrupted (see Thematics: Mapping AI's Diffusion, 2 Jan 2024). AI Enablers gained US$6trn of market cap globally in 2023, but looking ahead we see potential differentiation among AI Adopters as models are deployed. How does Asia-Pacific and EM Compare? In this report, we drill deeper into the results and implications for the Asia-Pacific region. Here we find an interesting juxtaposition, with the region having a relatively high share of enabling companies (especially in Taiwan, Korea and Japan). However, the region also has a higher share of companies likely protected from AI disruption (33% vs. 27% globally). Japan on the Front Foot: Japan stands out, with 53% of companies seen as AI beneficiaries, which nearly matches the US's share (54%) and stands above Europe (50%) and well above APxJ (39%). Tightening labour markets and digitalisation policy initiatives make this an underappreciated opportunity, in our view. While ASEAN and LatAm Companies Have Deeper Moats: AI is being adopted across APxJ, but to differing degrees, and the sector mix and regulatory environment act as potential buffers to earnings disruption. Exhibit 1:Mapping AI diffusion across Asia and EM markets and regionsSource: Morgan Stanley ResearchMorgan Stanley does and seeks to do business...
