17 September 2026
According to a recent Bloomberg report, earnings estimates for the emerging market universe are rising at the fastest pace on record, or at least as fast as the 2009 earnings recovery following the 2008 Global Financial Crisis.
The Asia ex Japan universe and the Emerging Market universe are essentially twins – both dominated by Taiwan, South Korea and China. These three markets account for 77% of the Asia ex Japan universe and 69% of the Emerging Market universe.
Unsurprisingly it is the earnings profiles of TSMC, Samsung Electronics and SK Hynix (31.1% of Asia ex index and 27.8% of the EM index) which are driving these upward revisions.
Investors in these two asset classes need to understand that any downturn in the AI driven demand for advanced chips would quickly reverse this earning growth.
On Tuesday this week the US 10-year Treasury yield touched 5% for the first time since 2007 (another memorable year!).
This reminded this author of the market crash across Asian markets in October 1987. On 19th October 1987 the Dow Jones Industrial Average fell 22.6%. Infamously the Chairman of the Hong Kong Stock Exchange, Ronald Li, reacted by closing the Hong Kong market for four days while most other Asian markets traded limit down for several days in a row reflecting the loss of liquidity in the regional’s second largest market after Japan.
What triggered this global equity crash? Well, some commentators may offer different reasons (it was a long time ago!) but the reality was that most equity investors in Global and Asian regional markets had ignored the fact that the yield on 10-year US Treasuries had risen from 7% in January 1987 to over 10% by September 1987.
Time for the long-memoried elephants to stand up!