Momentum is back in the Go Global trade. The rotation that hit the AI-linked stock markets in July has reversed, and the leadership that held for most of 2026 is back in play.
South Korea is the clearest sign of this development. The KOSPI is up more than 20% from its July 30 closing low. That ends a brutal stretch. The index fell almost 40% from its June peak as leveraged single-stock ETFs unwound, margin calls cascaded through retail accounts, and regulators halted new listings of the equity products that had fueled the run.
Korea’s forward earnings has quintupled in a year, and its forward profit margin now leads the emerging markets'.
Here's more:
(1) Stay Home vs Go Global. The price ratios of the US stock market to the rest of the world remain below their long-term uptrends from 2010 through early 2025, in both dollar and local currency terms (chart). Since then, they have been in short-term downtrends that remain intact despite recent increases in the ratios.
South Korea and Taiwan lead all country ETFs month to date in dollar terms, up 14.4% and 10.9%, with Japan third at 6.3% (chart). Japanese equities have held up despite the joint US-Japan intervention to boost the yen earlier this month, which normally would be a headwind for the stock market of a major exporter.
The ytd rankings show the same order with far greater divergence. Korea is up 84.9% and Taiwan 68.5%, with EM ex-China third at 33.9% (chart). The US is up 13.8%, in the middle of the pack. Indonesia is at the bottom, down 32.6%.
