Emerging Markets Equities

TSMC reported third-quarter net income of NT$763.1 billion, up 68.7% from a year earlier and above the NT$746.34 billion expected, on revenue of NT$1.49 trillion versus NT$1.47 trillion expected, with an operating margin of 58.7%. It forecast fourth-quarter revenue of $52.3 billion to $54.3 billion, a 14% sequential rise at the midpoint, and said demand remains well above its supply capacity.

Why it matters here: TSMC is the dominant weight in Taiwan's market and among the largest holdings of the emerging-markets ex-China benchmark, so a record quarter and higher guidance lift index earnings directly.

Counterpoint: Taiwan's market fell 2.6% on Friday and 7% over five days as the AI financing sell-off overwhelmed the earnings beat.

On October 10 the Reserve Bank of India restricted the rebooking of cancelled currency derivative contracts and opened a special window to meet the dollar needs of three state oil marketing companies. The rupee recovered from 96.79 to about 95 per dollar, but strategists expect it to weaken to 97 to 98 by the end of 2026 or the middle of 2027. Reserves fell $51 billion between August 30 and October 2, and foreign portfolio investors have sold $32.5 billion of Indian equities this year.

Why it matters here: Continued depreciation and portfolio outflows erode the dollar returns on Indian equities, one of the larger country weights in the class.

Counterpoint: India remains the fastest-growing major economy, the rupee has already recovered to about 95, and the central bank has pledged to keep markets orderly.

MSCI applied an immediate freeze on certain index changes for Turkish equities, citing concerns about coordinated trading, and said it may consult on reclassifying Turkey if progress is insufficient by June 2027. It also proposed moving the MSCI Indonesia Indexes to standalone status, citing opaque shareholding structures. Indonesia's Jakarta Composite fell 8% in early Friday trading; Turkey's BIST 100 fell 16.7% in September, and regulators ordered 131 funds with about $20.2 billion of assets into liquidation.

Why it matters here: The ex-China benchmark holds Indonesian and Turkish stocks that now face index freezes, possible removal and forced passive selling, raising risk premia in those markets.

Counterpoint: Indonesia and Turkey are small benchmark weights, and the Indonesian move is a proposal subject to consultation rather than a final decision.

Crude shipments through the Strait of Hormuz fell to about 9.4 million barrels a day after a week of attacks, and Brent settled at $109.86 on Friday. Strategists said the rupee could move toward 100 per dollar if oil rises further and portfolio outflows resume.

Why it matters here: Higher oil widens external deficits for the large Asian importers that dominate the benchmark — India, Korea and Taiwan — weakening their currencies and the dollar returns on their equities.

Counterpoint: Commodity exporters in the benchmark, such as Brazil, gain from higher crude, and the Reserve Bank of India's recent measures have already pulled the rupee back to about 95.

CXMT's plan to roll out a 4F-square DRAM structure by the end of 2026 sent SK Hynix and Samsung down 15% and 13% from Monday's open by October 13. The Kospi plunged about 8% on Thursday, triggering circuit breakers, and ended the week down 14.5%, its worst week since October 2008, before rebounding 2.05% to 5,668.05 on Friday.

Why it matters here: Samsung and SK Hynix are the heaviest weights in Korea's index, and a faster Chinese entry into advanced DRAM threatens their memory pricing power; Taiwan's chip-heavy market shares the same AI-hardware de-rating risk.

Counterpoint: Samsung projected a nearly ninefold rise in third-quarter operating profit amid supply shortages, the Kospi rebounded on Friday as dip buyers returned, and the finance ministry said it would step up market monitoring.