Written by Chris Ayton
Last week was a positive one for global equity markets, with the MSCI All Country World Index of global equity companies up +2.4%. Despite all the political, geopolitical and economic uncertainty, this pushes the gains for that equity index to +8.1% for the year-to-date – a very healthy return if you stayed invested over that turbulent four and a bit month period.
In periods of macroeconomic uncertainty, investors often seek areas of the market where a prevalent theme or structural change should result in more reliable profits, irrespective of the economic backdrop, at least in the near term. Currently, Artificial Intelligence (“AI”) related stocks and sectors around the world are a clear beneficiary of these flows. In the US, the S&P 500 Index was up +2.3% last week, but the tech-heavy NASDAQ-100 Index was up +5.5% and is up +14.5% in the year so far, more than twice the return of the wider US equity market.
Asia is the home to many of the largest AI beneficiaries, and these companies helped push MSCI Emerging Markets Index to a rise of +6.9% last week, taking the index return to +20.9% for the year so far. In Taiwan, Taiwan Semiconductor Manufacturing Company (known as TSMC) is the world’s largest semiconductor foundry, manufacturing highly intricate components for its large clients such as Nvidia, Amazon, Microsoft and Google who are investing absolute fortunes in growing their AI capabilities. In Korea, Samsung Electronics and SK Hynix are dominant in manufacturing memory chips that are critical in many areas of technology including AI datacentres and both have seen a record upsurge in demand for their products with seemingly no immediate end in sight.
The resultant explosion in the profits of these Asian tech companies has helped push MSCI Korea Index up nearly +18% in May alone and +87% in 2026 so far. MSCI Taiwan Index is up nearly +9% in May and +48% year-to-date. Although it controls many of the commodities that are needed for the global AI build-out, China currently has a lesser exposure to these large AI component manufacturers. China’s equity index is actually down nearly -4% this year and this has just led to Taiwan overtaking China as being the biggest single market in the MSCI Emerging Market Index, something that was unthinkable a year or so ago. Korea isn’t far behind. It is also notable that, dominated by the above tech behemoths, both Korea and Taiwan have also recently moved above the UK equity market in the list of world’s largest stock exchanges, despite their overall economies being a fraction of the UK’s size.
Demand for exposure to this theme has become quite a frenzy. Goldman Sachs reported last week that an MSCI Korea Exchange Traded Fund (ETF), which provide a cheap and blunt passive exposure to the entire Korean stock market including Samsung Electronics and SK Hynix, has accounted for up to 14% of all global ETF transactions over the last 3 months. A single memory and storage company focused ETF that only launched on 2nd April reached $1bn in size in just 10 days and is already over $5bn. How long this explosion in demand will continue is the key question being debated by many investors focused upon Asia and Emerging Markets. These are undoubtedly great companies operating in a sector of rapid growth but the key question is when will demand start to normalise or other sources of supply come on board, cooling their rapid growth in profits. With opportunities abound in other segments of Emerging Markets, we are happy to be meaningfully exposed to this theme in the already sizeable Emerging Market component of our portfolios but we are also actively ensuring we have exposure to other attractive structural opportunities in these high growth markets and elsewhere for when the frenzy dies down.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 11th May 2026
© 2026 YOU Asset Management. All rights reserved.