(Jan 3): Emerging-market stocks were off to strong start in 2026, climbing to the highest in almost five years as optimism about Asia’s growing role in artificial intelligence (AI) propelled the region’s technology shares.
The MSCI Inc index of developing nations rose 1.7% on the first session of the year, the best one-day advance since October, to close at the highest since February 2021. In the meantime, its emerging currency counterpart was flat on Friday.
The stocks rally underscores investor enthusiasm for AI-related assets, which continues to dominate attention in global equity markets. A gauge of tech shares was up 2.8%, buoyed by excitement around new listings and the outlook for the sector.
“Investors are overexposed to US growth and AI and are looking to areas that may have cheaper valuations or have not exactly worked over the prior cycle,” said Todd Sohn, a senior exchange-traded fund strategist at Strategas Securities. “That’s where emerging markets fit in.”
Chip designer Shanghai Biren Technology Co Ltd surged in its Hong Kong trading debut, while Baidu Inc climbed after its AI chip unit confidentially filed for an initial public offering. Latin American equities also moved higher on Friday, though the sub-index for the region was up just about 0.5%.
See also: Emerging-market stocks set for record high on tech optimism
The MSCI Emerging Markets Currency index, meanwhile, showed little direction as traders focused on expectations for US Federal Reserve easing. Brazil’s real surged almost to 0.9%, leading gains, while Mexico’s peso and the South African rand, bellwethers for risk appetite, advanced around 0.6% each.
The Argentine peso was one of the weakest performers in the developing world, declining more than 1% at the start of a new exchange-rate regime. The changes, which took effect on Friday, allow the peso to trade within a band whose upper and lower limits will widen at a faster pace, increasing the scope for potential depreciation.
In credit markets, Colombia’s short-term swaps rose after the Labor Ministry said the government is mulling measures to prevent inflation, including price controls.
See also: Indonesia set to revamp benchmark rates for money market
Senegal’s dollar bonds led gains among global emerging-market peers after the country’s finance minister indicated progress towards a new credit facility with the International Monetary Fund.
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