AI trade keeps capital – and risks – flowing to emerging markets

For the most dramatic change in a benchmark index in financial markets in recent years, look no further than the stock markets of developing economies. Just over a year ago, mainland China and India had a combined weight of 50 per cent in the MSCI Emerging Markets Index. Fast forward to today, and it is South Korea and Taiwan that account for over half of the gauge.

At the end of last month, the weight of South Korea in the index stood at nearly 24 per cent, four percentage points more than that...