Full Breakdown
AI-Fueled Rally Propels South Korean and Taiwanese Stocks to Emerging-Market Records
6/22/2026, 9:09:32 PM
AI-Driven Surge in Korean and Taiwanese Equities
In early June, AI-linked equities lifted South Korea and Taiwan to unprecedented levels. Taiwan’s benchmark index rose more than 3 % to a record 47,871.190, while South Korea’s KOSPI gained over 2 %. Together the two markets account for roughly 60 % of the MSCI Emerging Markets Asia index, which itself hit a new high. By contrast, the MSCI emerging-market currency gauge slipped 0.3 % for a third straight session and the Korean won weakened about 0.5 % against the dollar.
AI Boom Reshapes Emerging-Market Sector Composition
The rally reflects a rapid re-weighting of the MSCI Emerging Markets Index. Technology exposure has climbed from 24 % at the end of 2024 to roughly 42 % today. Taiwanese and South Korean equities now comprise more than 50 % of the index, up from under 30 % a year earlier. The shift is driven by heightened demand for AI infrastructure, semiconductors and digital platforms.
Data Highlights: Index Gains, Sector Exposure, Earnings Beats
- Over the past two years, EM equities have risen 72 % versus 41 % for developed-market equities (MSCI World).
- Weighted-average earnings per share (EPS) for MSCI EM constituents reached 95.1 points for the 12-month period ending May, surpassing the forward forecast of 94.6 points set a year ago.
- Profit beats: SK Hynix (+43 % vs. estimates), Samsung Electronics (+16 %), TSMC (+5.7 %); Indian Oil Corp (+33 %); Brazil’s Eneva (+44 %).
- Valuation contrast: the U.S. semiconductor-equipment index trades at >46 × forward earnings, while the MSCI EM Information Technology Index trades at 12.3 ×.
Implications for Investors
The concentration of AI-related tech stocks raises both opportunities and risks. Thomas Poullaouec of T. Rowe Price warns that EM allocations now carry “underappreciated concentration and correlation risks,” yet he notes that the sector’s earnings growth remains robust. A shift of 5 % from U.S. portfolio weightings could lift EM allocations by roughly 30 % because of the markets’ relative size. Lower valuations relative to U.S. peers and a multi-year AI-driven capex cycle provide a constructive backdrop, but exposure to semiconductor cycles and hyperscaler spending intensifies cyclicality.
Official Statements & Responses
- Poullaouec (T. Rowe Price) emphasizes that EM equities are increasingly tied to AI infrastructure, semiconductors and digital platforms, altering the source of cyclicality.
- T. Rowe Price has raised its overall overweight stance, favoring U.S. and EM equities while underweighting Europe and high-yield bonds.
- Jitania Kandhari (Morgan Stanley Investment Management) says regional performance will vary, but the overall direction is now positive—a marked change from the past decade.
- Archie Hart (Ninety One UK) calls the current environment “a genuine inflection point” where fundamentals are beginning to validate the rally.
- Ashish Chugh (Loomis Sayles) cautions that “there is still narrowness under the hood,” with most EPS growth still coming from tech.
- Anuj Arora (JPMorgan Asset Management) cites a softer dollar, deficit spending and a multi-year AI/infrastructure capex cycle as supportive for EM markets.
Criticism & Opposition
Analysts highlight concentration risk from the AI trade, noting that earnings surprises are largely confined to semiconductor firms. Non-tech sectors such as consumer staples, healthcare, real estate and utilities continue to lag forecasts, underscoring a “narrowness” that could amplify correlation across EM markets if AI sentiment shifts.
Verbatim Quotes
- “For cross-asset investors, EM allocations may be taking on more technology and growth exposure than many realize, bringing underappreciated concentration and correlation risks,” — Thomas Poullaouec, Portfolio Manager, T. Rowe Price
- “This is a genuine inflection point,” — Archie Hart, Manager, Ninety One UK
- “Performance across different regions will likely continue to vary, but the direction of travel across virtually all of them is now positive, which has not been true for most of the past decade,” — Jitania Kandhari, Deputy CIO, Morgan Stanley Investment Management
- “While regional performance differences will persist, the momentum is shifting in a positive direction across almost all regions,” — Gitanjali Kandhari, Deputy CIO, Morgan Stanley Investment Management
- “There is still narrowness under the hood,” — Ashish Chugh, Money Manager, Loomis Sayles
What’s Next
Analysts expect continued AI-related capex to sustain demand for semiconductor producers, while investors monitor the growing concentration risk. Upcoming earnings seasons in both tech and non-tech EM firms will test whether the rally can broaden beyond AI-centric stocks. Allocation shifts by global asset managers, especially any rebalancing away from U.S. equities, could further amplify EM exposure in the coming months.
