AI Rally Shifts Focus To Asia As Korea, Taiwan Stocks Outperform Globally

As investor focus shifts away from the Iran conflict, global markets are increasingly turning towards Asia for the next phase of the equity rally, with technology-heavy markets such as South Korea and Taiwan emerging as standout performers.

According to a Bloomberg report, shares in South Korea and Taiwan have delivered some of the strongest gains globally this month, driven by renewed optimism around artificial intelligence and semiconductor demand.

The rally has been powered by major technology companies including Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Company, which continue to benefit from booming AI-related demand.

South Korea's Kospi and Taiwan's Taiex index have sharply outperformed global peers, with investors aggressively positioning for further gains in AI-linked hardware and semiconductor stocks.

AI Trade Fuels Market Momentum

Derivatives strategists are increasingly recommending bullish positions on Korean and Taiwanese equities as implied volatility rises alongside stock prices, signalling continued investor appetite for the AI trade.

Analysts noted that both the Kospi 200 and Taiex are trading near peak implied volatility levels relative to the S&P 500, even as the Cboe Volatility Index has retreated below its one-year average.

"The strength of the move is producing extreme reversals from prior trends," Jun Gyun, derivatives analyst at Samsung Securities, was quoted as saying by Bloomberg.

Meanwhile, JPMorgan Chase strategists recommended bullish structures on emerging market and Asian equity products tied to AI hardware demand. They highlighted Taiwan's semiconductor ecosystem and Korean memory chip suppliers as key beneficiaries of the global AI boom.

The brokerage also pointed to increasing investor positioning in Chinese technology ETFs ahead of expected discussions between US President Donald Trump and Chinese President Xi Jinping on AI-related policies and technology issues.

India Among Weakest Performers

While AI-linked Asian markets rally, India has lagged behind.

The BSE Sensex is down 9.3% this year, making it one of the world's weakest-performing major equity markets. Analysts attributed the underperformance to India's dependence on oil imports, lower direct exposure to the AI hardware cycle and pressure on the rupee, which remains near record lows against the dollar.

The contrast has become more visible as investors rotate capital toward markets seen as direct beneficiaries of AI infrastructure spending and semiconductor demand.

The rally has also triggered a surge in retail and ETF activity across Asian markets.

Interactive Brokers recently enabled direct access to Korean equities for US retail investors, while leveraged exchange-traded funds tied to Korean stocks have seen record inflows.

Analysts cautioned, however, that the rapid rise in volatility and leveraged positioning could increase the risk of short-term overshoots if the tech rally loses momentum or geopolitical conditions stabilise sharply.