The emerging markets equity index has recorded its strongest quarterly performance in 17 years, propelled by a surge in Asian artificial intelligence-related stocks, successfully weathering market shocks from geopolitical tensions in the Middle East and rising oil prices.

On the final trading day of the month, the MSCI Emerging Markets Index closed up 1.5%, with South Korean and Taiwanese markets continuing to lead the gains, serving as the primary drivers of the emerging markets rally this year. On a quarterly basis, the index has surged more than 23%, marking its largest quarterly gain since June 2009.

This rally has been primarily driven by South Korea's KOSPI index and Taiwan's Taiex weighted index. On Monday, South Korea announced plans to invest approximately $880 billion to build new semiconductor manufacturing facilities, adding further momentum to the AI investment boom.

The chief market strategist at Zurich Insurance Group stated that the true driving force has consistently been technology investment, which is highly concentrated in South Korea and Taiwan.

He added that at some stage, the market will eventually find a new supply-demand equilibrium, and the current profit margins that far exceed normal levels will gradually recede. However, for now, given that U.S. hyperscale cloud computing companies continue to pour massive funds and capital expenditure into the sector, this rally likely has further room to run.