Tech‑Heavy Shift in MSCI Emerging Markets Highlights Semiconductor Concentration

A fresh report on the MSCI Emerging Markets (EM) index reveals a pronounced tilt toward technology, with the sector’s weighting jumping from 28.3% in December 2025 to 44.2% in May 2026. This surge is fueled primarily by a global upswing in AI‑driven semiconductor demand, propelling the index’s performance.

While the overall index has returned to its 2021 benchmark, only a small subset of markets has driven the gains. India, representing over 5% of the index’s weight, is trading 2.39% below its historical average valuation, making it relatively cheap. By comparison, Taiwan and South Korea trade at premiums of roughly 85% and 71%, well above the index’s average premium of 24.71%.

The technology sector accounted for 25.6 out of the index’s 25.3 percentage‑point annual return, underscoring its dominance. Three semiconductor leaders – TSMC, Samsung Electronics, and SK Hynix – contributed about 30% of the benchmark’s total profit, highlighting a concentrated risk profile.

The report warns that such concentration could make the MSCI EM index vulnerable to rapid sentiment changes regarding AI and semiconductor stocks. Nonetheless, it points to India as an attractive contrarian opportunity, given its solid macro fundamentals and valuation close to the long‑term mean. A shift in investor appetite away from heavily weighted tech shares could see capital re‑enter Indian markets.