Here's the link between Apple's 'unavoidable' price hikes and all-time highs for emerging markets

By Jules Rimmer

Tim Cook's says price hikes are 'unavoidable' owing to the rising price of memory and storage chips

Tim Cook, on a previous trip to China. South Korean, Taiwan and Japanese stocks hit new record highs on Thursday.

Just hours after Apple CEO Tim Cook said price hikes would be needed to cover the cost of microchips, the producers of those semiconductors pushed markets in South Korea and Taiwan to record highs.

On Wednesday (AAPL) Apple's chief executive Tim Cook told the Wall Street Journal that price rises on its products were "unavoidable" owing to the steep increases in the price of chips used in their manufacture. This surging demand for memory and storage chips is the chief propellant behind the all-time highs recorded today for the Korean KR:180721 and Taiwanese TW:Y9999 stock markets.

It also partly explains why Japan's Nikkei 225 JP:NIK also racked up its best-ever closing price.

In a daily note to clients, Goldman Sachs' head of Delta One Trading remarked, "More capex, more spend, more demand... anything tied to the AI buildout continues to fuel Korea and Japan."

The relentless demand for semiconductors was the impetus for significant moves in Korea's two benchmark heavyweights, Samsung Electronics (KR:005930) and SK Hynix (KR:000660). The gains for the two stocks that represent 53% of the KOSPI contributed to another 2.6% jump in the world's best performing stock-market of 2026. The KOSPI has now delivered a return of 115% so far.

Such is the strength of Korea's runaway that the 59% increase Taiwan's TAIEX benchmark looks relatively pedestrian in contrast. Here too, it's the insatiable demand from AI companies for Taiwan Semiconductor Manufacturing Company's (TSM) high-performance chips that has fuelled the rally. FactSet calculates that TSMC accounts for 41% of the index. Partners, suppliers and distributors in the TSMC eco-system make up something like 65% to 70% of the overall market.

While Japan doesn't manufacture the core AI chips, its best-performing stocks are indirect beneficiaries of the AI boom. Advantest (JP:6857) makes chip-testing equipment, SoftBank (JP:9984) has multiple AI-related holdings like Arm (ARM) and OpenAI while Tokyo Electron (JP:8035) also manufactures chip-maker equipment.This cohort represents about one fifth of the Nikkei 225 and has boosted the index return to 37% so far in 2026.

Given that TSMC, Samsung Electronics (including its preferred shares) and SK Hynix account for roughly 28% of the MSCI Emerging Markets Index EEM, the latter's 22% increase over 2026 is not surprising. However, the iShares MSCI Emerging Market exchange-traded fund clocked up its record close on June 2 and is hovering just below that level at present.

The drag on performance emanates from China. With a 25% weighting in the MSCI emerging-market index, its sluggish trading is weighing heavily. Weak domestic consumption and an industrial slowdown have seen MSCI China MCHI fall 6% in June and by a fifth since its recent cyclical peak in October 2025.

The relative performance of emerging markets over the S&P 500 SPX, a feature of the last eighteen months of investing, has accentuated in June with MSCI EM increasing 5% compared to a flat return for the S&P 500.

In pre-market trading Thursday TSMC's U.S.-listed depositary receipts were 1.87% higher at $440 and the EM ETF was indicating a gain of 2.52% at 70.29.

-Jules Rimmer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-18-26 0538ET