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Markets · Narrative··Updated May 11
Part of: China Stimulus

Emerging Markets Hit Record Highs as South Korea, India Lead AI Chip Rally

Emerging Markets Hit Record Highs as South Korea, India Lead AI Chip Rally

Emerging-market equities have surged to record highs on AI infrastructure enthusiasm, with South Korea's Kospi up 5% and JPMorgan raising bullish targets on memory-chip demand. India's Nifty lags amid oil and inflation concerns, creating a divergence within the EM complex.

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Key facts

  • Emerging-market stocks hit record highs; South Korea Kospi surged 5% on semiconductor optimism
  • JPMorgan raised Kospi target to 10,000 for second time in a month; cites semiconductor cycle and governance reform
  • India's Nifty down 1-1.2% amid oil and Iran war concerns; rupee on track to 98 per dollar by year-end
  • China April auto sales fell 21.5%; gasoline vehicle demand collapsed while EV uptake insufficient to offset
  • SK Hynix up 9% in Seoul morning trading; memory-chip deal rumors driving Samsung and chip supplier upside

What's happening

Emerging-market stocks have hit record highs as the AI boom spreads beyond the US mega-cap universe into regional semiconductor and tech plays. South Korea's Kospi index surged 5% at the open on optimism around semiconductor and memory-chip valuations, buoyed by reports of memory-chip deals and SK Hynix's +9% jump in Seoul morning trading. JPMorgan raised its Kospi bull-case target to 10,000 for the second time in less than a month, citing improvement in the semiconductor cycle and corporate governance reforms as tailwinds. The bank flagged that high valuations represent a possible risk factor for correction, but the long-term AI outlook remains compelling.

India's equity benchmarks, by contrast, are lagging. The Nifty 50 and Bank Nifty are down 1% to 1.2% amid oil shock concerns and rupee weakness. India's rupee is on a floundering trajectory toward 98 per dollar by year-end despite expected interest rate hikes, a sign that energy import bills and capital outflows are offsetting monetary tightening. Monex Europe expects the rupee to remain under pressure as long as oil remains elevated and global risk sentiment wavers.

This divergence within EM reflects the two-speed recovery story: tech-heavy, export-focused, chip-producing nations like South Korea benefit from AI infrastructure demand, while commodity importers and oil-dependent economies like India face margin compression and currency depreciation. China's April auto sales fell sharply on gasoline-car demand destruction, but electric vehicle names and tech exporters are benefiting from the broader AI enthusiasm and export tailwinds.

The narrative hinge is whether the memory-chip and semiconductor rally spreads to broader EM consumption names or remains a narrow play on semiconductor equipment and memory producers. If oil prices stabilize and inflation pressures ease, broader EM equities could participate. Conversely, if the geopolitical standoff persists and oil remains elevated, the divergence could widen further as energy importers like India and Indonesia fall further behind.

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