Emerging-market stocks and currencies climbed to fresh records on Wednesday, with the latest Asian tech gains lifting South Korea’s bourse to the world’s ninth largest, topping both France and Germany.
Indian information technology shares also rebounded after hitting 30-week lows on back of a Citrini Research report that predicted widespread job losses linked to AI adoption. The relief came after Anthropic PBC, the startup whose tools partly drove recent market selloffs, signaled its Claude chatbot integrates rather than displaces existing systems.
Tech shares in Taiwan and South Korea, on the other hand, are seen benefiting from ever-increasing tech spending. MSCI’s technology sub-index rose 2.6% on Wednesday, led by Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. That took MSCI’s emerging stock index 1.3% higher to new record high, extending year-to-date gains to 15%.
South Korea’s stock market now has a $3.76 trillion valuation, having added roughly $2.2 trillion this year, according to Bloomberg-compiled data as of Tuesday. The benchmark Kospi index has jumped about 44% and is the world’s best-performing stock market this year. Christy Tan and Marcus Weyerer at Franklin Templeton predicted the rally to extend even further if governance and shareholder focus improve.
“Korea appears fully priced in a headline rally, yet it remains structurally undervalued beneath the surface,” they wrote, adding the market could re-rate further “if policy stability holds and corporates institutionalise shareholder returns.”
Investors also snapped up Taiwanese stocks, in their biggest one-day buying spree in two decades.
Emerging currencies also extended gains as the dollar remained under pressure. MSCI’s emerging currency index is now 1.6% higher year-to-date. The Korean won rallied 0.4%, bolstered by equity inflows, while China’s onshore yuan extended its longest winning streak in over 15 years. The Thai baht underperformed after a surprise rate cut by the Bank of Thailand.
Bank of America strategist Mikhail Liluashvili says there’s room for the rally to run further, arguing that “the US administration wants a more competitive currency, and the dollar decline so far has been small compared to previous cycles.”
“During previous dollar downcycles, EM local debt and equities rallied 100%, which could suggest two-thirds still to go,” he wrote.
The Hungarian forint gained the most in the EMEA region, after a poll showed the opposition Tisza party widening its lead over Prime Minister Viktor Orban’s ruling Fidesz. A Tisza win could unlock billions of euros in frozen funds for Hungary from the European Union. The forint touched Nov. 2023 highs against the euro, also benefiting from the central bank’s pledge to remain cautious on policy, after it cut interest rates as expected on Tuesday.
In South Africa, Finance Minister Enoch Godongwana is due to deliver his annual budget at 2 p.m. in Cape Town and has signaled that debt as a share of gross domestic product will stabilize in the current fiscal year. The rand firmed 0.4% against the dollar, while 10-year bond yields ticked marginally lower.
This article was generated from an automated news agency feed without modifications to text.
