Emerging Markets Insights: South Korea insights and first quarter market review

South Korea is drawing a broader base of global investors, and company management teams are now treating policy as a core part of their strategy rather than a backdrop. Regulatory clarity and supportive frameworks, such as progressive dividend policies in financials post IFRS‑17, are reshaping capital allocation and helping define competitive moats. While demand—especially in AI-linked semiconductors—remains robust, conversations have shifted from upside potential to the durability of this upcycle, with supply bottlenecks and customer concentration emerging as key drivers of earnings dispersion.

Against this micro backdrop, emerging market equities were marginally negative in the first quarter of 2026 amid heightened geopolitical risk and Middle East conflict. AI enthusiasm supported South Korean and Taiwanese markets even as China and India struggled with valuation concerns, higher oil prices and margin pressures. The Middle East saw equity weakness on rising oil-driven disruptions but may benefit from an eventual policy response, while Latin America was more resilient thanks to Brazil’s rate cuts and strong corporate earnings despite renewed inflation pressure in Mexico.