The MSCI Emerging Asia ex China Index surged 10.5% during the month, reflecting broad regional strength, with tech heavy South Korea and Taiwan leading the charge. South Korea benefited from increased strength in industrials and rising global demand for artificial intelligence (AI)-related technology. Early in the month, Samsung and SK Hynx, the country’s two largest chip firms, signed letters of intent to supply OpenAI with memory chips as the US tech firm scales up for its Stargate project. Sentiment was further supported by a new trade agreement between Seoul and Washington, which included lower reciprocal tariffs and a US$350 billion South Korean investment in the US. 

Taiwan also delivered a notable rally. The MSCI Taiwan Index gained 9.8%, outperforming both EM and developed market (DM) counterparts. Stronger global demand for AI semiconductors was a key driver, with Taiwan Semiconductor Manufacturing Company (TSMC) exceeding expectations and reporting record quarterly revenue of US$33.1 billion, a 39.1% increase from the previous quarter. 

Indian equities ended the month ahead of the EM index, reclaiming some of the previous month’s losses. Public sector banks outperformed, while the media sector lagged. Record Diwali holiday sales provided additional support, contributing to a 4.4% rise in the MSCI India Index over the month. 

China diverged from the broader EM trend, slipping back into negative territory after five consecutive months of gains. Renewed US-China tensions weighed on market sentiment in early October, though conditions later improved as the two countries agreed to a one-year trade truce. The agreement includes a 10% reduction in tariffs on Chinese exports, cooperation on curbing the flow of fentanyl, renewed Chinese purchases of US soybeans and energy products, and a one-year suspension of new US Entity List restrictions by Washington. China also agreed to suspend export controls of rare earths which are essential in manufacturing cars, planes and weapons.  

In emerging Europe, Hungary outperformed with index heavyweight OTP Bank driving returns, while Greece delivered the weakest performance. Elsewhere, Saudi Arabia and Qatar underperformed amid softer energy prices, and equity markets in Brazil and South Africa came under pressure from currency weakness.