Emerging Markets Equities

TSMC reported on 15 October third-quarter revenue of NT$1,494.24 billion (US$46.72 billion), up 50.9% on the year, and net income of NT$763.06 billion, up 68.7%, with a 66.4% gross margin. Advanced nodes of 7nm and below were 79% of wafer revenue. It guided fourth-quarter revenue to US$52.3-54.3 billion with a 65-67% gross margin, citing a steep 2nm ramp.

Why it matters here: TSMC is the dominant weight in the Taiwan index, so record profit and strong guidance raise index earnings directly and contradict the AI-demand slowdown story at its most important supplier.

Counterpoint: AP reported TSMC's U.S. shares fell as much as 5.3% and closed down 1.8% on the day of the results, a sign that investors are de-rating AI hardware on funding concerns regardless of near-term results.

The executive order signed late on 16 October waived tariffs of up to 100% on top buyers of Russian crude and gas, including China and India, CNBC reported; Secretary of State Rubio defended the 60-day pause on 17 October as a chance to assess the impact on the global economy.

Why it matters here: India, one of the largest buyers of Russian crude, avoids a punitive U.S. tariff on its exports and keeps access to discounted Russian oil, which supports both its exporters and its import bill.

Counterpoint: The relief is temporary and conditional on a 60-day review, and Indian equities remain exposed to Brent at $109.86 whatever the supplier.

The BSE Sensex rose 1,533.72 points, or 2.11%, to 74,315.61 on 15 October and the Nifty 50 gained 1.66% to 22,997.35, led by IT and banking stocks after quarterly results from HCLTech and TCS, Ventura Securities reported. Lower crude during the session, with Brent near $104.71, and a firmer rupee eased import-cost concerns; mid- and small-cap indexes declined.

Why it matters here: IT services and private banks are large weights in the India index, so results-driven buying in those names lifts the large-cap benchmark, with investors treating established Indian IT as an alternative to expensive AI stocks overseas.

Counterpoint: Breadth was weak, with mid- and small-caps lower, and Brent's rebound to $109.86 on Friday reverses the import-cost relief that helped the rally, so this single-session move may fade within days.

China's largest memory maker, CXMT, said at a Shanghai conference on 10 October that it had achieved key advances in 4F2 DRAM cell technology and plans a next-generation DDR5 server module by the end of 2026, Kyunghyang Shinmun reported. SK Group chairman Chey Tae-won warned China is catching up rapidly; TechInsights says Chinese makers remain more than two generations behind in server DRAM.

Why it matters here: Samsung Electronics and SK hynix are the largest weights in the South Korea index, and credible Chinese entry into server DRAM would erode the pricing power behind their memory earnings, a structural headwind for Korean equities.

Counterpoint: Specifications and launch timing are undisclosed, yield, stability and customer wins are unproven, and TechInsights puts Chinese makers more than two generations behind, so any earnings impact is years rather than quarters away.

Brent settled at $109.86 on 16 October, up 3.7% and its highest since mid-May, after trading near $104.71 during India's 15 October session. Attacks in or near the Strait of Hormuz reached at least 10 in the week, and over the weekend Saudi forces intercepted drones and ballistic missiles and a supertanker was reported to have hit a mine.

Why it matters here: India and South Korea import most of their oil and LNG, so higher crude widens their current-account deficits, pressures their currencies and lifts inflation, squeezing refiners, manufacturers and consumers in both indexes.

Counterpoint: Brazil and other commodity exporters in the emerging-market basket benefit from higher oil, and India's rupee was firming this week, giving importers some buffer.

AP reported South Korea's Kospi fell 7.6% on 15 October, leaving it 39% below its June record, as the global AI selloff spread to Asia; TSMC's U.S. shares fell as much as 5.3% that day. The Kospi rebounded 2.05% to 5,668.05 on 16 October, while U.S. chip shares fell for an eighth straight session.

Why it matters here: North Asian markets carry the heaviest semiconductor weights in the emerging-market universe, with Korea dominated by Samsung Electronics and SK hynix and Taiwan by TSMC, so a de-rating of AI hardware hits their indexes hardest.

Counterpoint: The Kospi's rebound on 16 October and TSMC's results, which show AI demand still accelerating, suggest forced selling may already be largely done.

MSCI warned that Indonesia's emerging-market status is at risk and launched a consultation on a double downgrade to standalone status, citing opaque shareholding structures, suspected coordinated trading and weak enforcement, Bloomberg reported. The Jakarta Composite fell almost 12% on 16 October, its largest one-day drop since January 1998, triggering a 30-minute halt, and the rupiah neared a record low. Mirae Asset estimates about $3 billion of passive outflows; a final decision is expected in June.

Why it matters here: The ex-China emerging-market benchmark holds Indonesian equities that face forced passive selling, and the governance concerns raise risk premia across ASEAN markets in the same index.

Counterpoint: Indonesia is only about 0.4% of the MSCI Emerging Markets Index, an estimated $3 billion outflow is small, and Jakarta has announced free-float and disclosure reforms that could avert the downgrade before June.