Rockefeller International Chairman Ruchir Sharma has issued a stark warning to investors regarding the perceived diversification benefits of investing in Taiwan and South Korea. Sharma contends that rather than broadening portfolios, these markets primarily amplify exposure to the US-led artificial intelligence (AI) boom, particularly through the dominant presence of Taiwan Semiconductor Manufacturing Company (TSMC).
TSMC's Dominance Raises Concerns
Sharma highlighted the disproportionate influence of TSMC within emerging market equities. He described it as "a bit scary" that a single company now commands a greater weight in the MSCI Emerging Markets Index than all of India combined. According to MSCI's October 30, 2026 factsheet, TSMC represented 15.87% of the benchmark, surpassing India's 11.73% and Brazil's 3.9%. The combined weight of India and Brazil (15.63%) still fell marginally short of TSMC's share.
This concentration means that investors seeking to diversify their holdings by entering Taiwan and South Korea might inadvertently be increasing their bet on the US AI cycle, rather than spreading risk across different emerging economies.
Zero Diversification in Taiwan, South Korea Investment
When questioned about potential buying opportunities following market declines in South Korea and Taiwan, Sharma was unequivocal. "No, I think that these markets are just leverage plays on the AI cycle, which is America. So you're going to get zero diversification by being in Korea and Taiwan," he stated. He emphasized that investing in these regions is essentially a leveraged bet on the American technology sector.
The veteran investor noted that the MSCI Emerging Markets Index has become heavily skewed towards these two economies. As of October 30, Taiwan accounted for 28.88% of the index and South Korea 19.66%, resulting in a combined weight of 48.54%. This leaves minimal room for other developing nations like Indonesia, the Philippines, and various Eastern European markets, many of which carry weights below 1%.
China's Disappointing Performance
Turning his attention to China, Sharma expressed deep pessimism regarding its equity market, despite its advancements in artificial intelligence. He described China as "the most disappointing trade," noting that initial enthusiasm for Chinese AI companies has consistently failed to translate into sustained shareholder returns.
Sharma attributed China's underperformance to several factors, including a struggling domestic economy and a prolonged property market downturn. He argued that the downward pressure from the property bust on the broader economy is significant and often underestimated. Furthermore, he questioned the ability of Chinese technology companies to generate attractive returns for shareholders due to intense competition and excessive capital chasing returns. "There's too much overinvestment. Very few Chinese companies are able to build a moat," he remarked, also citing regulatory uncertainties and frequent share issuance to the government as deterrents for investors.