The benchmark index for emerging market equities has climbed close to the highest level in its 38-year history, supported by a powerful rally in artificial intelligence stocks that has added nearly $10 trillion to global shareholder wealth since April.
The MSCI Emerging Markets Index rose by 1.26% at the time of writing, marking a record close and its strongest start to a year since 2018.
Taiwan Semiconductor Manufacturing Company (TSMC) accounted for more than half of the index’s gains, after Goldman Sachs raised its price target for the chipmaker, a key supplier to Apple and Nvidia. Other stocks showing notable moves included Samsung Electronics, SK Hynix, and Alibaba Group Holding.
Emerging market equities entered 2026 with strong momentum after posting their biggest annual gains in eight years and outperforming U.S. stocks for the first time over the same period in 2025.
The rally has been supported by a weaker U.S. dollar, increased appetite among American investors for overseas assets, and reform momentum in economies such as Ghana and South Korea. Optimism over the outlook for Asian AI-related companies, along with expectations of additional Chinese stimulus, has further boosted investment flows, as asset managers increasingly view this segment as under-allocated.
Todd Sohn, senior ETF and technical strategy analyst at Strategas in New York, said the moment has been long awaited, noting that while global ETFs have seen steady inflows to maintain balanced allocations, many remain underexposed to emerging markets. This, he added, offers investors room to increase allocations, particularly as a way to reduce reliance on U.S. AI stocks.
The MSCI Emerging Markets Index extended its rally for a seventh consecutive session, its longest winning streak since mid-September, lifting year-to-date gains to around 3%. Valuations have risen to 13.4 times forward earnings, above the five-year average of 12.3 times.
Charu Chanana, chief investment strategist at Saxo Markets, said emerging markets may continue to receive near-term support, but warned that gains are likely to be uneven rather than a sustained rally. She added that strong momentum in Asia’s technology and AI supply chains could push the index higher, particularly if global risk appetite remains robust.
Investors are now looking for fresh catalysts to drive the next leg of the rally, with upcoming U.S. economic data and major corporate earnings expected to provide clearer signals on market health. At the same time, concerns over the Federal Reserve’s interest-rate outlook, renewed geopolitical tensions, and upcoming elections across Latin America are keeping some investors cautious.
