EM Equity Strategy HALO Effect in EM Equities

This report introduces two EM equity baskets, GSEMHALO (Capital Intensive) and GSEMLAHO (Capital Light), demonstrating how physical asset exposure outperforms in the current macro-thematic environment. Capital Intensive stocks benefit from structural AI demand and strategic re-industrialization, showing stronger EPS growth projections.

Key Takeaways

• 1.The report introduces the HALO (Heavy Assets, Low Obsolescence) framework for EM equities, identifying stocks that derive value from physical assets rather than intangible/human capital.
• 2.Capital Intensive EM stocks have significantly outperformed Capital Light stocks since late 2025 (115% vs 7%), driven by fundamental earnings growth and AI-infrastructure demands.
• 3.Earnings momentum remains stronger for the Capital Intensive basket, with a 63% projected 26-27 EPS CAGR compared to 11% for the Capital Light basket.

Table of Contents

• Introducing GS EM Capital Intensive and Capital Light baskets
• Basket Methodology and Composition
• Appendix