Emerging Market Stocks Hit Record Highs, Technology Sector Leads Gains

Overview

This report summarizes the April 2026 performance of emerging market stocks. The MSCI Emerging Markets Index hit a record high, driven mainly by expectations of US-Iran negotiations and strong performance of the technology sector. Semiconductor-heavy markets such as South Korea and Taiwan led the rally, but geopolitical risks and energy shortages still pose concerns.

Core views

Emerging markets achieved a strong recovery in April: MSCI Emerging Markets Index rose 14.5% in a single month, recovering last month's decline and hitting a record high. This rebound was mainly driven by expectations of a temporary ceasefire agreement between the US and Iran; although the Strait of Hormuz remains blockaded, high-level talks between both sides enhanced expectations of a de-escalation. Regional performance showed significant divergence: The South Korean market led with a 37.4% gain, driven by a twin drive of semiconductor company earnings beating expectations and increased capital expenditure from US cloud vendors; the Taiwan market rose 26.6%, benefiting from AI supply chain results and 11.9% quarterly GDP growth. The technology sector went full bloom: The IT sector posted a 32.2% single-month return, the Industrial sector rose 20.4%, and previously weak sectors made a strong comeback. South Korea IT (+46.6%) and Taiwan IT (+29.8%) became the main drivers. Fund flows diverged: Emerging market equity funds saw a net inflow of $3.9 billion, but entirely contributed by ETFs (net inflow of $8.2 billion), with non-ETF funds still flowing out.

Analysis framework

Institutions adopt a multi-dimensional comparative analysis approach: Horizontally compare differences in market performance across countries, highlighting the leading advantage of regions concentrated on the semiconductor industry chain (Korea/Taiwan); Vertically track sector rotation characteristics, analyzing the performance divergence between defensive sectors (Telecom Services / Consumer Staples) and cyclical sectors; Combine fund flow data to verify market sentiment, assessing investor structure changes through the difference in fund flows between ETFs and non-ETFs.

Methodology notes

• Industry/Industrial Analysis FrameworkVolume-Price Breakdown

  Volume-price driving in Emerging Market Stock Analysis

  The report decomposes the rise in the Korea/Taiwan markets into the combined effect of rising chip prices (supply contraction) and surging AI demand (increased capex by mega-tech companies), reflecting a typical volume-price two-factor model in industry analysis

• Event Gambling and Behavioral FinanceEvent-driven analysis

  Phased Impact of Geopolitical Events

  When evaluating the Strait of Hormuz blockade event, institutions analyze changes in market expectations regarding negotiation progress (ceasefire agreement extension as a catalyst), demonstrating a method for capturing short-term opportunities in event-driven types

• Macroeconomic frameworkInterest rate parity

  Impact of Exchange Rate Changes on Capital Flows

  The report correlates KRW appreciation (2.8%) with foreign capital inflow phenomena, implying the analytical thread of exchange rate changes transmitting to cross-border capital flows via the interest rate parity mechanism

Key data

• MSCI EM Gain14.5%Monthly gain, hit record high
• Korea KOSPI37.4%April gain ranks first
• Technology Sector Return Rate32.2%Leads major sectors
• ETF Net Inflow$8.2 billionSupports overall fund inflow

Impact & implications

The report believes the strong rebound indicates that market concerns over geopolitical risks have temporarily eased, but potential supply chain disruptions need to be watched. Tech stocks dominating the trend confirms the continued prosperity of the AI industry chain, but secondary impacts of energy shortages in some emerging countries need attention.

Risks

• Derived impacts of continuous Strait of Hormuz blockade
• Risk of fuel rationing spreading in Southeast Asia
• Intensified crude oil price volatility