Emerging markets hit record highs on AI chip optimism and tech strength

Emerging-market indices posted fresh record highs as traders shrugged off Iran war concerns to chase AI and semiconductor upside. South Korea's KOSPI jumped 5%, buoyed by SK Hynix and Samsung positioning, while JPMorgan raised its Kospi bull case target to 10,000 on semiconductor cycle improvement and corporate governance reform. Taiwan's tech-heavy index also participated, reflecting strong demand for chips and foundry services. However, India's Nifty and Bank Nifty lagged, down 1% to 1.2%, as oil and Iran war concerns outweighed tech enthusiasm.

The divergence exposes the K-shaped recovery thesis taking hold across emerging markets. AI-exposed tech economies and semiconductor exporters benefit from capex cycling and productivity narratives; energy importers and commodity-dependent nations face imported inflationThe rate at which prices rise across an economy., currency depreciation, and margin compression. India is considering emergency measures to preserve foreign exchange, including gold import curbs and fuel price hikes. The Thai baht and Korean won are under pressure from oil costs, though the semiconductor cycle provides a partial offset for South Korea. The Philippines is expected to weaken further despite rate hike expectations, signaling that energy vulnerability trumps monetary policy.

The record highs mask structural fragility. Valuations in emerging-market tech are stretched relative to global peers, and any slowdown in US AI capex or shift in carryIncome earned from holding a position over time.-trade dynamics could reverse flows quickly. Conversely, a ceasefire in the Iran war and normalization of oil supply would likely broaden the emerging-market rally beyond AI names, benefiting energy importers and reducing currency depreciation fears.