Global investors are shifting focus to Asian markets like South Korea and Taiwan. These markets are seeing strong gains driven by demand for AI and semiconductor stocks. Companies like Samsung Electronics and Taiwan Semiconductor Manufacturing are leading this surge. This trend contrasts with other emerging markets such as India, which are facing headwinds.

Global Markets: Korea, Taiwan emerge as the biggest winners of AI equity boom

Synopsis

Global investors are shifting focus to Asian markets like South Korea and Taiwan. These markets are seeing strong gains driven by demand for AI and semiconductor stocks. Companies like Samsung Electronics and Taiwan Semiconductor Manufacturing are leading this surge. This trend contrasts with other emerging markets such as India, which are facing headwinds.

Asian equity markets are emerging as the next major destination for global investors as attention shifts away from geopolitical tensions in the Middle East and back towards growth opportunities tied to artificial intelligence. According to Bloomberg, markets in South Korea and Taiwan have become standout performers this month, powered by surging demand for semiconductor and AI-linked stocks.

South Korea’s Kospi index has risen sharply this year, making it one of the best-performing equity benchmarks globally. Taiwan’s stock market has also posted strong gains, driven largely by optimism surrounding the global AI boom and the dominant role played by companies such as Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Co. in the semiconductor supply chain.

Bloomberg reported that derivatives strategists are increasingly recommending bullish options strategies to capture further upside in these markets. The rally has also led to a sharp increase in implied volatility, particularly in Taiwan and South Korea, where volatility gauges are approaching peak levels relative to the S&P 500 Index. At the same time, the Cboe Volatility Index has retreated below its one-year average, signaling calmer conditions in US markets.

A derivatives analyst told Bloomberg that the Korean market is witnessing a rare “vol up, spot up” pattern, where both stock prices and volatility are rising simultaneously. He said the trend may continue until the market enters a consolidation phase.

The AI-driven rally has left behind several other emerging markets, including India. Bloomberg noted that India’s heavier dependence on oil imports, limited AI exposure and a weak currency have weighed on investor sentiment. The S&P BSE Sensex Index has fallen 9.3% this year, making it one of the weakest-performing major indices globally.

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Investor enthusiasm for Korean equities has intensified to the point where Interactive Brokers Group Inc. recently introduced direct access to South Korean markets for US retail investors. Bloomberg also cited a recent report by JPMorgan Chase & Co. stating that assets under management in leveraged exchange-traded funds linked to Korean stocks have surged to record levels. The report added that regulatory approval for single-stock leveraged ETFs could further fuel speculative inflows and increase the risk of “flow-driven overshoots.”

Strategists at Societe Generale SA observed that the 12-month variance spread between the Kospi 200 and the S&P 500 has reached historically elevated levels. According to Bloomberg, the bank believes a reversal in this trend would require a calmer geopolitical backdrop, softer oil prices and a pause in the technology rally — conditions that are not yet visible in the market.

Meanwhile, JPMorgan strategists continue to maintain a bullish outlook on emerging-market equities tied to the AI theme. Bloomberg reported that the bank recommended bullish positions on the iShares MSCI Emerging Markets ETF, citing strong macroeconomic fundamentals and sustained demand for AI infrastructure.

Ahead of a potential summit between Donald Trump and Xi Jinping, investors have also increased bullish bets on Chinese technology stocks. Bloomberg said traders have been buying call spreads on the iShares China Large-Cap ETF and call options on the KraneShares CSI China Internet ETF as expectations build around AI-related policy discussions.

JPMorgan strategists led by Tony Lee have additionally recommended call spreads on Taiwan’s Taiex index and structured bullish trades involving the Kospi 200 and Japan’s Nikkei-225 Stock Average to capitalize on the continuing strength in AI hardware stocks.

According to Bloomberg, strategists believe the strongest earnings momentum globally continues to come from companies linked to AI hardware bottlenecks, including US technology giants, Korean memory-chip suppliers and Taiwan’s semiconductor ecosystem. They added that Taiwan remains one of the most efficient ways for investors to gain broad exposure to the global AI hardware theme.

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