Q2 Markets: Korea, Taiwan Propel Emerging Equities

Global equities regained footing in the second quarter of 2026 as corporate earnings held up and the U.S. dollar strengthened, according to a quarterly recap using data through June 30, 2026. Emerging-market stocks led gains while China posted a second consecutive quarterly decline.

South Korea and Taiwan each delivered returns above 50% for the quarter, lifting the broader emerging-markets cohort. Returns from those markets offset negative performance in China and weak showings in parts of Latin America.

Currency movements accompanied equity flows. The U.S. dollar strengthened against several major peers, with the Japanese yen and the Canadian dollar among the weakest. The recap linked the Canadian dollar’s weakness to lower oil prices and described the yen cross as a commonly used risk-on/risk-off indicator.

The report identified resilient corporate earnings as a primary factor supporting markets despite softer macro data and geopolitical tensions. Dan Zolet wrote, ‘Earnings are what allows the market to climb this wall.’ The recap noted the Federal Reserve was expected to keep policy on hold at quarter end.

RiverFront’s portfolio teams described differences in approach across time horizons: shorter-horizon strategies emphasize technical analysis and price momentum, while longer-horizon strategies place greater weight on changes in fundamentals. At the end of June, the firm measured both technical and fundamental momentum as broadly positive and reported that tactical indicators were being monitored for potential shifts.

The recap flagged investor implications and risks. A stronger dollar can reduce U.S. investors’ returns on foreign holdings, while weaker local currencies can boost exporters’ competitiveness and support local equity performance. The report reiterated standard risks for international and emerging-market investing, including currency volatility, foreign taxes and regulation, political instability, potential market illiquidity, and the sensitivity of fixed-income securities to rising interest rates. It also noted that diversification does not guarantee a profit or protect against loss.

On longer-term trends, the analysis said South Korea and Taiwan have emerged as growth-oriented drivers within emerging markets after a decade in which China had been the region’s main engine. The report concluded that investment teams would continue to monitor earnings trends, market technicals and policy developments for signs of change.