Global emerging market equities, particularly those centered on Asian emerging markets, along with assets like emerging market sovereign currencies, gold, and silver, have continued their exceptionally strong rally from late 2025 into the start of 2026. As increasingly strained relations between the US and sovereign governments worldwide, including traditional European allies, exert significant selling pressure on dollar-denominated assets, a new wave of "Sell America" sentiment has thoroughly activated diversified capital flows globally and reignited the trend of worldwide multi-asset allocation. An investment surge focused on Asian emerging market equities—notably the stock markets of South Korea, China's A-shares and Hong Kong, Taiwan, and India—is attracting a massive influx of global capital, while precious metals like gold and silver are also actively riding this wave of diversification. During Friday's Asian trading session, as emerging Asian markets accelerated their gains—especially led by technology stocks in markets like South Korea, Hong Kong, and China's A-shares—an MSCI benchmark index measuring Asian emerging equities climbed to a fresh all-time high, also setting a record closing high, building on its robust gains from previous days. Concurrently, the broader MSCI Emerging Markets Index, propelled by Asian markets, is also racing toward a historic peak. Investors are pouring cash into emerging market equity funds at a record-breaking pace, driving the MSCI Emerging Markets Index to successive new highs, while Asian sovereign currencies and bonds have also seen significant inflows recently. Latest market dynamics reveal that China's central bank set the yuan's daily midpoint at a robust level stronger than 7 per US dollar for the first time in over two years, bolstering the overall upward trend of Asian emerging market sovereign currencies. Gold prices, supported by the "de-dollarization" wave, currency devaluation crises, and heightened geopolitical tensions driving safe-haven inflows, have surged close to the epic $5,000 per ounce milestone. During this week's trading, amid strong global support for safe-haven demand fueled by the Greenland sovereignty crisis, a massive crash in Japanese long-term government bond prices, threats to Federal Reserve independence from former President Trump, and sovereign currency devaluation pressures from debt, gold—a key precious metal—has extended its record-breaking price rally. After a staggering 70% surge in 2025, gold spot and futures prices have continued their meteoric bull run into early 2026. Ray Dalio, founder of the world's largest hedge fund, Bridgewater Associates, argues that the current global monetary order centered around the US dollar is collapsing. Major central banks worldwide are increasingly viewing fiat currencies as unreliable stores of value, turning instead to gold accumulation, reflecting a broader market shift from fiat money to hard assets against a backdrop of US sovereign debt explosion and resurgent global geopolitical distrust amid trade and capital wars.
Asian emerging market stocks are on an absolute tear! China's A-shares and South Korean equities have exhibited spectacular gains since the start of 2026. Investors are injecting capital into Asian emerging market equity funds at an unprecedented rate. As the rotational momentum of funds exiting US assets gains strength, both the MSCI Asia Emerging Markets Index and the broader MSCI Emerging Markets Index hit record highs on Friday, while the MSCI Latin America Index reached its highest level since April 2018. Even local currency government bonds in some long-neglected Latin American markets have soared to new peaks. Disputes surrounding Greenland have reignited financial market skepticism regarding "American economic exceptionalism" and "dollar hegemony," leading investors to conclude that US assets are no longer the world's safest or most reliable long-term holdings. This has prompted a widespread diversification of portfolios from Europe to India, aiming to significantly reduce long-term reliance on US assets, particularly US Treasury bonds. Undeniably, this burgeoning wave of capital diversification has provided powerful momentum for the strong rebound in Asian emerging market stocks and bonds since the beginning of 2026. This rebound is fueled by resilient global economic growth, a worldwide surge in AI-related expenditures, shifting political landscapes in Latin America, and a return to fiscal and monetary orthodoxy in many developing nations. Asian emerging market equities are undoubtedly core beneficiaries of this global capital diversification trend. As the sustained impact of US tariff policies combines with a growing market consensus around "long-term dollar depreciation" and the "gradual erosion of American exceptionalism," global capital flows are shifting from a singular focus on dollar-denominated assets towards a more globally diversified portfolio. Within this context, Asian emerging market equities—possessing the triple attributes of "high growth, low correlation, and low valuation"—especially high-growth Asian technology stocks, are attracting substantial global interest. Whether it's Taiwan Semiconductor Manufacturing (TSM), unique in advanced semiconductor manufacturing, global memory chip giants Samsung Electronics and SK Hynix, or Chinese chipmakers like SMIC and leading domestic semiconductor equipment manufacturers benefiting from the "domestic substitution" wave, these are essential stock picks for global investors seeking exposure to the unprecedented AI technology surge and semiconductor super-cycle.
The South Korean stock market has been a standout performer in global equities for 2026. Intense global bullish sentiment towards memory chips propelled South Korea's benchmark Kospi index to a wild 76% surge in 2025, making it one of the world's hottest markets, primarily driven by the explosive rallies of its two largest constituents, memory chip leaders SK Hynix and Samsung Electronics, which together account for over 30% of the index and contributed nearly half of its gains. On January 22, 2026, the Kospi index briefly breached the historic 5,000-point milestone, setting another record, again fueled by strong performances from SK Hynix and Samsung this year. On Friday, the index continued its record-breaking run, with year-to-date gains approaching 20%. The performance of the Taiwanese stock market and China's A-share market since the start of 2026 has also been exceptionally robust. Driven powerfully by its super-heavyweight constituent, Taiwan Semiconductor Manufacturing (TSM), Taiwan's benchmark Taiex index has repeatedly刷新ed record highs, breaking through the significant 30,000-point barrier early in 2026 and continuing to set new peaks. Wall Street giant Goldman Sachs reaffirmed its "Conviction Buy" rating on TSM and, based on increasingly optimistic expectations for soaring AI computing demand, has raised its price target for the stock twice since January, with the latest target set at a lofty NT$2,600. As of Friday's close, TSM's share price settled at NT$1,770. The high demand for AI GPUs since 2023 and the recent explosive demand for AI ASICs are both heavily reliant on TSM's manufacturing capabilities. As the world's largest contract chipmaker, TSM continues to benefit as the fervent wave of AI adoption shows no signs of abating, sweeping across the globe. Its clients, chip giants like NVIDIA, AMD, and Broadcom, are reaping rewards from the surge in demand for the core infrastructure of AI—AI chips. The substantial increase in chip manufacturing contracts from these giants to TSM has driven TSM's consistently stronger-than-expected performance expansion since last year, underpinning the logic behind the stock's repeated new highs in both Taiwan and its US ADR. China's A-share market has also shown strong momentum, with the Shanghai Composite Index remaining near its highest level since late July 2015 as of Friday's close, having recently set a record for its longest winning streak. The index has gained approximately 5% year-to-date in 2026, while the ChiNext Index has also risen close to 5%. The A-share rally is primarily fueled by sustained market optimism regarding China's AI application progress, led by entities like DeepSeek, and the robust performance of China's AI computing supply chain under the "domestic substitution" trend. Against the backdrop of exploding global demand for AI computing infrastructure and the "domestic substitution" wave amid Sino-US strategic competition, leading stocks in A-shares' AI computing supply chain, chip design, and semiconductor equipment sectors have seen their prices soar to repeated record highs, accompanied by significant earnings growth. Oliver Cox, Asia Pacific Equity Portfolio Manager at J.P. Morgan Asset Management, noted that Chinese semiconductor equipment manufacturers hold a "picks and shovels" advantage—demand for their equipment will continue to benefit from industrial upgrading and the domestic chip substitution trend, regardless of competitive shifts among downstream chipmakers. The fund managed by Cox, overseeing $2.1 billion, has outperformed 95% of its peers this year.
A "quiet exit" from US assets is underway. Katie Koch, CEO of TCW Group, stated in a media interview on Friday, "People are trying to diversify away from US assets. I would characterize it as a 'quiet exit' from the long-favored US Treasury assets. I don't think some of this selling will come with a big announcement; I think they will continue to look for diversification opportunities." Long-weak Latin American sovereign currencies like the Brazilian real, Colombian peso, and Chilean peso have already appreciated over 3% this year. Simultaneously, in a significant bullish development for gold's record-breaking price, the National Bank of Poland, one of the world's largest gold buyers, approved a major plan on Tuesday to purchase an additional 150 tonnes of the precious metal. Similar to the logic driving Asian emerging markets to new highs, gold is also a major beneficiary of the global asset diversification trend. Latest statistics show that the iShares Core MSCI Emerging Markets ETF, with assets of $135 billion (investing globally in emerging market equities, heavily weighted towards China and South Korea), attracted nearly $6 billion in net inflows in January, potentially marking its largest monthly inflow since the ETF's inception in 2012. Oliver Harvey, a senior strategist at Deutsche Bank in London, wrote in a report, "Emerging market assets are the primary beneficiaries of accelerating global growth. When growth opportunities in developed markets are constrained or face significant negative headwinds, the outlook for emerging markets becomes even more bullish." Strategists Rohit Garg and Gordon Gao from Citigroup noted in a report, "The themes of de-dollarization and US fiscal profligacy are back. De-dollarization and fiscal deficit expansion are very likely to impact risk premiums in emerging markets, particularly Asian tech stocks, in a more positive manner, just as they did in 2025."
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