Asian stocks are poised for their best February performance ever as investors flock to companies in the region that provide products for building artificial intelligence infrastructure.

The MSCI Asia Pacific Index rose 6.7% this month, marking its best February performance since the index’s inception in 1998. The index rose 0.1% on Friday, on track to outperform the S&P 500 for the third consecutive month. Stock index futures suggest that Wall Street’s benchmark index may fall on Friday.

South Korea, a bellwether for AI investment, is the best-performing country in Asia, with the Korea Composite Stock Price Index (KOSPI) rising about 20% this month. The index is up 49% year-to-date, making it the best-performing index globally.

Asian stocks have outperformed benchmark indices in Europe and the US as investors flock to companies supporting the expansion of AI infrastructure, viewing these companies as the “picks and shovels” of the supply chain. In contrast, the potential disruptive impact of this new technology has triggered weeks of stock market turmoil in the US, impacting all sectors in a phenomenon known as “AI panic trading.”

Global asset managers, with over $20 trillion in assets under management, are increasingly bullish on emerging market equities, currencies, domestic bonds, and credit markets, potentially fueling the sector’s record-breaking rally.

A review of outlook reports from some of the world’s largest asset managers by Citigroup found that funds across the board increased their long positions in Asian, Latin American, and European, Middle Eastern, and African markets. Meanwhile, the MSCI Emerging Markets Index is near record highs.

In other market sectors, US Treasuries maintained their gains, with the 10-year Treasury yield at 4%. During US stock trading, the yield briefly touched a year-to-date low. The US dollar was largely unchanged.

In commodities, oil prices stabilized after the US and Iran held a round of nuclear talks on Thursday and agreed to hold more talks next week. Meanwhile, the large-scale US military deployment in the Middle East continued to put market tensions. Furthermore, gold is on track to end its longest monthly winning streak since 1973, with a more than 6% gain in February marking its seventh consecutive monthly increase.

On Friday, Asian stocks were led by declines in technology stocks. Previously, Wall Street benchmark stock indexes fell as market sentiment was pressured by a lukewarm response to Nvidia’s earnings report.