Emerging-market stocks are having a rough week. The benchmark emerging-market equity index fell for a second straight day, dragged lower by a fresh selloff in AI-linked technology shares.
Where the pain is concentrated
The damage is not spread evenly. It is clustered in the markets that host the world’s biggest chipmakers, which also happen to carry outsized weight in the MSCI Emerging Markets index.
On July 17, 2026, the MSCI Emerging Markets index dropped 2.6% to 1,620.66 as worries about AI valuations swept through tech stocks. That session pushed the benchmark into correction territory, meaning a decline of more than 10% from a recent high.
Taiwan took a particularly heavy hit during that July stretch, with its stocks sliding 6.5%.
The MSCI EM index has previously lost between 2% and 3.8% in individual sessions during tech selloffs. Some of those were tied to cautious outlooks from companies such as Broadcom.
Korea’s chip giants under pressure
By early October 2026, the MSCI emerging Asia index had fallen nearly 3.5% as Asian equities sank to two-month lows.
The KOSPI posted multiple sessions with losses exceeding 5% to 6%. Shares of Samsung Electronics and SK Hynix fell between 7% and 10%.
Korean chip stocks extended their losing streak to a fifth consecutive day by October 13, 2026. Part of the pressure came from rising competition from Chinese memory maker CXMT.
Foreign money heads for the exits
In September 2026, foreign investors pulled $26.3 billion from emerging-market stocks and bonds, marking the first net outflow since June.
The research describes the broader driver as a mix of two forces: apprehension about whether AI demand is sustainable, and profit-taking after a long rally spanning 2025 and 2026.
Background: how emerging markets became an AI trade
Semiconductor and tech companies in Taiwan and South Korea now represent a significant share of the MSCI Emerging Markets index, with their combined weight sometimes exceeding 40%. That concentration helped the benchmark ride the AI wave higher during the 2025 and 2026 rally.
What this means for investors
The September outflow of $26.3 billion is worth watching closely. If October and subsequent months show continued withdrawals, it would suggest the July correction was not a one-off shakeout but part of a longer reassessment.
The pressure from CXMT on Korean memory makers points to a scenario where even strong AI demand may not translate into the same profits for incumbents.
Past selloffs in the EM index have followed cautious forecasts from firms such as Broadcom, so upcoming earnings and outlooks from major AI suppliers could set the tone for Asian chip stocks.
The research frames any recovery as dependent on renewed confidence in AI-driven profitability and sustainable capital spending.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.