EM Equities: A V-Shaped Comeback, but Mind the Concentration

Emerging market equities have seen a V-shaped recovery driven almost entirely by five North Asian tech giants linked to the AI buildout. Investors should maintain diversified exposure with tilts toward Brazil, Malaysia, and China to mitigate extreme concentration risk.

Key Takeaways

• 1.EM equity recovery is highly concentrated in five North Asian technology companies, without which overall EM returns would be negative.
• 2.The dominance of North Asian tech (TSMC, Samsung, SK Hynix) has shifted the MSCI EM index composition, with Taiwan's weight now exceeding Mainland China's.
• 3.The concentration is driven by the global AI buildout and a memory upcycle expected to last until the second half of 2027.

Table of Contents

• Why so concentrated?
• Diversification and risk management: More important than ever
• Global asset class preferences definitions
• Appendix

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