Emerging markets have become essentially an AI play, with Taiwan and South Korea now comprising 45-46% of the index and technology making up 41%, yet they trade at a record 50% discount to the S&P 500.
The hosts note that the composition of emerging markets has transformed from energy and banks to semiconductors and AI-related companies, creating a potential value opportunity compared to U.S. tech at double the valuation. ✦ AI generated
Michael Batnick · The Compound · 2026-08-12 · original ↗
starts at this moment · 12:45
Taiwan and South Korea now make up 45, 46% of the Emerging Markets Index. China is another 20%, India's 12. So, those are the biggest ones. Technology now makes up 41%. So, obviously, you're getting a big part of this like if you think the US stock market is concentrated, emerging markets are more concentrated. But it's interesting to think about this as a thought exercise. What would you rather own for the next 5 years? If this Let's say the AI trade continues, okay? Would you rather own emerging markets trading at a 10 times forward earnings forward PE or the S&P trading at 20 times forward earnings?
verbatim transcript · starts at 12:45
12:30the past 2 years. And obviously, the reason this is happening is because Taiwan and Korea South Korea are now such a big part of it. So, you look at this. Taiwan and South Korea now make up 45, 46% of the Emerging Markets Index. China is another 20%, India's 12. So, those are the biggest ones. Technology now makes up 41%. So, obviously, you're getting a big part of this like if you
12:53think the US stock market is concentrated, emerging markets are more concentrated. But it's interesting to think about this as a thought exercise. What would you rather own for the next 5 years? If this Let's say the AI trade continues, okay? Would you rather own emerging markets trading at a 10 times forward earnings forward PE or the S&P trading at 20 times forward earnings? When I think emerging markets at 40%
13:16technology and a lot of that in South Korea and Taiwan and then China, it's more of a pure AI play. Like would you rather own the Nasdaq or the emerging markets right now? I think it's a fair question. >> It Well, it is. So, the valuation aspect of it is interesting, but I'm glad you said that because it's basically saying, would you rather own Samsung and SK
13:34Hynix or the hyperscalers? >> And Taiwan Semi, and yeah. Dang it, I did say semi. >> You said it in the in the ad read, too. You're a semi guy, it's okay. >> All right. But I I think that this is another thing that 5 years ago you'd go, "What? You're nuts. If you're going to tech pure play technology, I'm owning the United States." Now, it's a
13:55This is a legitimate question. If you want And obviously the one of the reasons that the earnings are cheaper is cuz the these are semi stocks that are powering >> And the and the earnings are semi-permanent. But I'm sure >> So, I think >> Well, guess what? How about this? How about this? Both. Doesn't You know, it doesn't need to be all or nothing. >> But it just It's crazy how quickly this