A blistering rally in emerging markets is challenging the long-standing dominance of U.S. equities. South Korea’s KOSPI has doubled in six months and surged sharply in early 2026, powered by semiconductor strength and AI-driven optimism. Shares of Samsung Electronics have more than tripled over the same period, reflecting booming demand for memory chips. The rally has been reinforced by regulatory reforms and strong capital inflows, pushing the Korean won to multi-month highs and financial conditions to their loosest levels on record, according to Goldman Sachs. Yet valuations suggest this is not purely speculative momentum—the KOSPI is trading at relatively modest forward earnings multiples, indicating investors expect substantial profit growth ahead.

The strength is not confined to Korea. MSCI’s emerging market benchmarks, along with Taiwan’s TAIEX and Brazil’s Ibovespa, have posted double-digit gains this year. Taiwan, home to TSMC—a key supplier to Nvidia and Apple—has sharply upgraded its growth outlook on AI demand. Meanwhile, surveys from Bank of America show investors are now the most overweight emerging markets in five years. Although optimism is running high, EM equities still trade at a discount to the S&P 500, suggesting that, despite the surge, the rotation may have further room to run if global conditions remain supportive.