Consensus asset allocation broadens tech exposure, increasing allocations to China, Taiwan, and Thailand

Overview

This report is JPMorgan's emerging market equity macro and consensus asset allocation research. It reviews the positioning of 54 emerging market fund managers under the EPFR Global framework as of the end of April 2026, and tracks the performance of 56 EM funds through May 29, 2026. The core conclusion is that consensus allocation is broadening technology-related exposure, especially by increasing allocations to China, Taiwan, and Thailand.

Core views

The report argues that the most notable change is that consensus has increased allocations to China, Taiwan, and Thailand, with net underweights in these markets all narrowing; JPMorgan maintains its overweight view on Taiwan and China. At the same time, EM funds reduced exposure to Brazil, Korea, and several smaller markets, while India remains the most underweight among large EM countries. On performance, MSCI EM rose 9.5% over the past three months, and the median fund outperformed the benchmark by 2.2%; Korea IT, Korea consumer discretionary, Taiwan IT, China IT, Mexico materials, Korea, Taiwan, and Peru have significantly outperformed over the past month. On the factor side, price momentum, earnings momentum, and size factors led performance, while volatility, reversal, and Beta lagged.

Analysis framework

The report measures consensus positioning through funds' overweight or underweight status relative to the benchmark, and combines EPFR fund allocations, Bloomberg daily NAV, MSCI EM benchmark performance, fund return dispersion, Beta, and quantitative factor performance to assess changes in emerging market asset allocation and style.

Methodology notes

• Asset AllocationDefinition of consensus overweight and underweight

  Measure market consensus using significant deviations of fund weights relative to index weights

  A consensus overweight market is one where the number of significantly overweight funds exceeds the number of significantly underweight funds; significant underweight includes being more than 2% below index weight. For small markets, near-zero weightings (below 0.1%) are also classified as underweight.

• Sample and data sourcesEM fund allocation and performance sample

  Track allocation samples and performance samples separately

  The asset allocation section uses data from 54 EM fund managers disclosed by EPFR Global as of the end of April 2026; the performance section tracks 56 EM funds with daily NAV quotes from Bloomberg Finance L.P., with a cutoff date of May 29, 2026.

• Risk and return metricsBeta and return dispersion

  Use daily return slope and interquartile range to measure market sensitivity and fund performance dispersion

  Beta is calculated as the one-month slope of EM fund daily returns relative to MSCI EM daily returns; return dispersion is calculated as the difference between the upper and lower quartile return cutoff points over the relevant period, with three-month and six-month returns annualized.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China/Hong Kong equities

  Consensus net underweight narrowed from 7 to 2, and J.P.Morgan maintains overweight on China.

  Strengths

  The underweight narrowed sharply, China IT significantly outperformed over the past month, and the technology exposure theme is consistent with the report title.

  Weaknesses

  It remains in a net underweight state, and the report does not provide stock-level earnings or valuation details.

  Comparison

  Compared with large EMs such as India, positioning in China/Hong Kong has improved more clearly at the margin.

  Risks

  If technology performance weakens or capital flows out again, the marginal support from the narrowing underweight may diminish.

• Taiwan equities

  Consensus net underweight narrowed from 26 to 24, and J.P.Morgan maintains overweight on Taiwan.

  Strengths

  Taiwan IT and the Taiwan market significantly outperformed over the past month, in line with the theme of expanding technology exposure.

  Weaknesses

  The absolute level of net underweight remains high.

  Comparison

  Compared with Brazil and Korea, which were reduced, Taiwan received a marginal increase in allocation and remains overweight.

  Risks

  It is highly dependent on the technology chain and momentum performance, and may come under pressure if global risk appetite for technology declines.

• Thailand equities

  Consensus net underweight narrowed from 19 to 17, with a marginal increase in allocation.

  Strengths

  The underweight narrowed, indicating that funds have started to add back some exposure.

  Weaknesses

  The net underweight remains significant, and the report does not provide details on sector or earnings drivers.

  Comparison

  The direction of improvement is consistent with China and Taiwan, but the strength of evidence is weaker than for Taiwan and China.

  Risks

  If liquidity or investor preference in smaller markets deteriorates, the replenishment trend may be unstable.

• India equities

  The most underweight market among large EM countries.

  Strengths

  It still commands structural attention as a large EM market.

  Weaknesses

  May FPI outflows were US$3.9bn, the third consecutive month of net outflows, with YTD outflows of US$26bn.

  Comparison

  Unlike the narrowing underweights in China and Taiwan, India's outflow pressure is more pronounced.

  Risks

  Sustained outflows and underweight pressure may drag relative performance.

• Korea equities

  Net overweight fell from 5 to 2, as funds reduced exposure.

  Strengths

  Korea IT, Korea consumer discretionary, and the Korea market significantly outperformed over the past month.

  Weaknesses

  Foreign investors were net sellers of Korean equities by US$28bn in May, and positioning declined at the margin.

  Comparison

  Although sector performance was strong, fund flows and changes in net overweight were weaker than in Taiwan.

  Risks

  Foreign selling and lower positioning may offset the positive contribution from sector performance.

• Brazil equities

  Net overweight fell from 27 to 24, as funds reduced exposure.

  Strengths

  It still remains net overweight.

  Weaknesses

  Foreign investors were net sellers of Brazilian equities by US$3bn in May.

  Comparison

  Compared with the marginal increases in allocation to China, Taiwan, and Thailand, Brazil was marginally reduced.

  Risks

  Outflows and declining overweight may reduce relative attractiveness.

Key data

• China + Hong Kong net underweight2 (previously 7)The consensus underweight narrowed, indicating increased allocation.
• Thailand net underweight17 (previously 19)The underweight remains high but has narrowed at the margin.
• Taiwan net underweight24 (previously 26)The underweight narrowed, and J.P.Morgan maintains overweight on Taiwan.
• Brazil and Korea net overweightBrazil 24 (previously 27); Korea 2 (previously 5)EM funds reduced exposure to both markets.
• Net foreign selling in MayKorea US$28bn; Brazil US$3bnThe report states that foreign investors were net sellers of Korean and Brazilian equities in May.
• India FPI outflowsMay US$3.9bn; 2026 YTD US$26bnIndia is the most underweight among large EM countries and saw net outflows for the third consecutive month.
• MSCI EM three-month performance+9.5%The report states that MSCI EM rose over the past three months.
• Median fund relative performance vs. benchmark+2.2%The median fund outperformed the benchmark.
• 2026 YTD EM fund flowsNet inflow of US$74.3bnThe report shows year-to-date net inflows into emerging market funds.

Impact & implications

The positioning changes indicate that emerging market capital is shifting at the margin away from some traditionally overweight or outflow markets toward China, Taiwan, Thailand, and technology-related exposure. For portfolios, the Taiwan and China technology chains benefit from narrowing consensus underweights and JPMorgan's overweight view; meanwhile, fund flows and positioning changes in India, Brazil, and Korea suggest short-term allocation pressure or divergence risk. At the factor level, momentum and size are outperforming, while high Beta, volatility, and reversal strategies are under pressure, implying that portfolio risk exposure needs to be managed in conjunction with market sensitivity and style rotation.

Risks

• The main body of the tables was not retained in the input, so some quartiles, maximum/minimum holdings, and specific fund rankings need to be checked against the original PDF.
• Differences in fund domicile and tax treatment may distort fund return comparisons.
• Over the long term, the median fund may underperform the benchmark due to costs; ETF total returns are calculated based on share price rather than NAV, and may be affected by premiums/discounts.
• The text contains two different statements, 'increase' and 'decrease,' regarding the number of funds outperforming the benchmark over the past month; the original layout or table should prevail.
• Near-zero weights in small markets are classified as underweight, which may overstate the number of underweight small markets.
• The report includes distribution restrictions and multi-region compliance disclosures, and should not be interpreted as investment advice for all investors.

What to watch

• Whether the net underweights in China + Hong Kong, Taiwan, and Thailand continue to narrow in the next EPFR release.
• Whether India FPI stops its consecutive net outflows, and whether the YTD outflow scale expands.
• Whether foreign net selling in Korea and Brazil continues, and whether it further depresses fund net overweight.
• Whether the relative strength of Taiwan IT, China IT, Korea IT, and Korea consumer discretionary continues.
• Whether price momentum, earnings momentum, and size factors continue to lead, and whether volatility, reversal, and Beta recover.
• Whether EM fund return dispersion and median Beta continue to rise or remain below the five-year average.
• Whether the inflow trend remains sustainable after 2026 YTD EM fund net inflows of US$74.3bn.