Emerging-market equities extended gains for a third straight session, with sentiment shifting back toward earnings momentum after Taiwan Semiconductor Manufacturing Co. TSM delivered a strong update. The MSCI EM equity index rose more than 1%, as TSMC reported a 58% increase in profit and raised its revenue forecast, reinforcing the view that artificial intelligence demand could remain resilient despite the economic backdrop shaped by the Iran war. That read-through appeared to support broader technology names including Samsung Electronics, Alibaba Group Holding, Tencent Holdings, and SK hynix, which were among the leading gainers.
The leadership remains concentrated in technology, where MSCI’s information technology sub-index advanced 1.6%, bringing its gain for the year to nearly 40%, more than double the next-best performing sector, industrials. Investors are increasingly framing the earnings outlook around AI-linked demand rather than oil-driven macro risks, with some portfolios already heavily tilted toward semiconductor enablers. That dynamic is showing up at the country level as well, where Taiwan’s Taiex has risen 17% this month and South Korea’s Kospi has climbed 23%, marking a sharp reversal from the early stages of the conflict when the Kospi had dropped 18% in two sessions. Taiwan’s equity market has also overtaken the UK in total value, becoming the world’s seventh largest.
Beyond equities, conditions across emerging markets are stabilizing. China’s first-quarter growth came in above expectations, suggesting limited spillover so far from the Iran conflict, while emerging-market currencies have moved closer to recovering earlier losses. At the same time, sovereign credit markets are reopening, with spreads narrowing to 244 basis points, the lowest level since Feb. 20. After a slow March, eurobond issuance has accelerated, rising more than 200% in April to $41 billion, with Brazil and Turkey raising $5 billion and $2 billion respectively, a shift that could indicate improving investor appetite as volatility begins to ease.