(Bloomberg) — Emerging markets rose as the latest surge in the Asian tech sector coincided with the impact of a deal between Israel and Hamas on assets across that region.
Middle Eastern sovereign bonds led the gains in emerging markets, with the dollar debt of Israel, Jordan and Egypt jumping following a breakthrough in negotiations toward ending a two-year war. The Tel Aviv stock exchange 35 index rose more than 2% and the shekel appreciated.
Read: TSMC Reports Better-Than-Expected Sales on Sustained AI Demand
The rally in the Middle East happened concurrently with the MSCI EM information technology index rising as much as 1.3%, led by Taiwan Semiconductor Manufacturing Co. The firm reported a 30% increase in third-quarter sales at the close of trading, which may boost expectations that this year’s tech-led rally in emerging market stocks has further to go. TSMC closed at its highest on record, sending this year’s gains to 34%.
“As a firm, we are believers in AI,” said Naomi Waistell, a fund manager at Carmignac. “Some of these supply chain names, particularly in Taiwan, make very high gross margins, and we still see strong demand. I do think that this rally has further to go but we are getting to a stage now where we’re being mindful about position sizing and valuation.”
The Taiwanese company is a key chipmaker for the likes of Nvidia Corp., Advanced Micro Devices Inc. and Broadcom Inc., and it also makes processors for Apple Inc. devices.
China’s stock market rose Thursday after a weeklong break, with the onshore CSI 300 Index ending the day 1.5% higher. Indonesia’s 10-year yield dropped to its lowest level in nearly four years as expectations for more interest-rate cuts helped government bonds extend a rally driven by strong demand from domestic investors.
Ukraine’s bonds may be facing further headwinds after Russian strikes in recent days have wiped out more than half of Ukraine’s domestic natural gas production, likely forcing the country to spend €1.9 billion ($2.2 billion) on fuel imports to survive the winter. This year, Ukraine’s sovereign bonds have handed investors a 2.2% loss, the worst performance in emerging and frontier markets after Argentina and the Maldives.
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