Hang Seng Index Surges 2% as AI Drives Emerging Market Rally Despite Strong Dollar

According to EJFQ Research, the Hang Seng Index rose 295 points to 23,350 on Friday (July 4), gaining 2.05% over two days. Unexpectedly, the U.S. dollar index, typically pressuring emerging markets, surged 6.54% year-to-date to 101.8, its strongest level in over a year.

Emerging market stocks, tracked by the iShares MSCI Emerging Markets ETF (EEM), have defied their historical inverse relationship with the dollar, posting gains alongside dollar strength. The rally is primarily driven by AI-related stocks, particularly semiconductors from Taiwan and South Korea—including TSMC, Samsung Electronics, and SK Hynix—which now comprise over 30% of the EEM portfolio, supporting the broader emerging market performance.