As global asset managers continue to favour artificial intelligence ( AI )-themed investments despite currently high valuations, emerging markets, particularly those in Asia, have notably outperformed.

South Korea and Taiwan, in particular, are attracting significant attention for their AI hardware capabilities, while China is concurrently developing its own AI value chain, bolstered by its broader economic scale.

“Recent labour market statistics in the US have led to a broadly supportive view on equities, despite any potential disruptions from the conflict in Iran,” says Keiko Kondo, Schroders’ head of multi-asset investments for Asia. “AI and technology on the whole are driving conviction for the asset class in the US, global emerging markets, China and Asia ex-Japan.”

The Nasdaq 100 has increased by 16% year to date. Among MSCI’s sector-specific indexes, the Information Technology index, which covers large and mid-cap emerging markets technology stocks, was the best performer in the first six months of the year. AI stock growth is now transitioning from hype to fundamental value, anchored by strong corporate earnings.

Emerging markets outperform

While the US market has shined, emerging markets are continuing to see strong outperformance. The MSCI Emerging Markets index gained 24% in the first half of the year, while South Korea’s Kospi surged a remarkable 101.1%.

Driven by the AI boom, Taiwan and South Korea currently dominate global IT hardware. Taiwan leads in cutting-edge logic chips via TSMC, while South Korea excels in advanced memory chips through Samsung and SK Hynix. This specialized success has caused intense financial market concentration: TSMC now accounts for over 42% of the Taiwan Stock Exchange, and Samsung and SK Hynix combined make up roughly half of South Korea’s Kospi index.

Consequently, South Korean chip exports have experienced massive year-on-year value surges of around 103% to 161%, creating phenomenal revenue figures, according to Indosuez Wealth Management.

“However, there is currently a notable mismatch between booming export figures and lagging physical factory production,” notes Francis Tan, Indosuez’s chief strategist for Asia. This discrepancy is largely due to an inventory “destocking phase”, in which manufacturers are fulfilling strong global semiconductor demand by shipping out existing stock rather than immediately starting new production runs.

Furthermore, a significant portion of the export growth seen in late 2025 and early 2026, Tan explains, has been driven by rising prices rather than an increase in unit volume.

“In Asia, the AI story is primarily around hardware,” Kondo adds. “On the software side, particularly in China, which is trying to develop a distinct value chain with the support of its strong economy, we see a drive towards both software and domestically produced hardware, even if the latter is not yet as mature as its global peers. This can also be considered an investment in RMB assets, providing currency diversification away from US dollar assets.”

Diversification beyond AI

Although AI has dominated the narrative of the 2026 equity market, diversification remains key. Beyond leading in critical high-end technology supply chains and innovative technology, Asia also offers strong opportunities in Halo ( heavy assets, low obsolescence ) sectors, which are far less exposed to technological obsolescence.

Regarding commodities, Kondo explains that since gold currently maintain a relatively high correlation with equities, instead, they are looking towards other metals, such as copper, steel and iron.

These industrial metals benefit directly from the buildout of AI infrastructure and power grids, while simultaneously standing to gain from physical government stimulus spending aimed at boosting the broader economy.