Emerging Market Equities Break to New Highs as AI and Trade Visibility Improve

The MSCI Emerging Markets Index has pushed to fresh highs, rising around 0.7% on the latest session and extending its advance to a fourth consecutive week. This is not a momentum-driven squeeze or a broad speculative risk-on move. It is being underpinned by a very specific and increasingly visible combination of fundamentals that matter for the next phase of global asset allocation: artificial intelligence capex, trade visibility and earnings delivery.

Taiwan Semiconductor’s latest results were central to this shift in sentiment. Strong earnings and a reaffirmation of elevated capital expenditure plans reinforce our view that the AI investment cycle is not confined to developed markets. It runs directly through emerging-market supply chains, balance sheets and earnings trajectories. The newly agreed US–Taiwan trade framework adds further support, with tariffs on Taiwanese goods reduced to 15% and Taiwanese semiconductor firms committing to roughly USD 500 billion in financing and investment linked to US operations over time. That is not a short-term headline. It is a medium-term structural signal.

What stands out is the behaviour beneath the surface. While EM equities are breaking higher, EM currencies remain mixed and broadly contained. The Taiwan dollar has edged higher, the Indian rupee has weakened, and the US dollar remains supported by resilient US economic data. This is not a classic, broad-based risk-on episode. It is selective, earnings-led and equity-driven, which in our view improves the quality and durability of the move rather than undermining it.

From a technical perspective, EM equities have re-entered a well-defined uptrend. The index is trading above its 50-, 100- and 200-day moving averages, with those trend measures beginning to realign positively after a prolonged consolidation phase. For us, that transition from recovery to trend is a meaningful signal, particularly when it coincides with improving earnings visibility and structural demand drivers.

In this environment, we believe emerging markets should be approached less as a single cyclical or macro allocation and more as a differentiated equity opportunity set. Asia, and particularly technology-linked markets, are increasingly driving returns through tangible earnings growth rather than multiple expansion alone. With AI investment, trade normalisation and capital expenditure translating into visible cash flows, the case for structurally underweight positioning anchored in legacy risk narratives is steadily eroding.