(Bloomberg) — Emerging-market stocks and currencies headed for a weekly advance amid thinned holiday trading as investor sentiment remained bullish heading into the year-end.
MSCI Inc.’s gauge of EM equities rose as much as 0.6% in Asian trading to its highest level since Nov. 14. Tech-heavy markets of South Korea and Taiwan led regional gains, with shares of Samsung Electronics Co. climbing to an all-time high. Up 2.2% over five sessions, the stock gauge was on track for its best weekly advance since the period ended Nov. 28. Markets in Indonesia and Hong Kong were closed for a holiday.
A measure of developing-nation currencies took its gain since last Friday to 0.6%, headed for a fourth straight weekly increase and the biggest since August.
While EM stocks look poised to finish 2025 on a high after having rallied 30% so far this year, market watchers say the outlook depends on trends in artificial intelligence and the path of Federal Reserve’s interest rates — both of which remain uncertain.
“AI theme conviction remains uneven. That is the most important driver,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. The push higher “can extend if US dollar stays soft, but the bigger test comes when liquidity returns in early January.”
The Korean won led EM currencies higher on Friday amid a weaker greenback and inflows into local stocks. The won strengthened to its strongest since Nov. 4 after authorities earlier this week said excessive weakness in the currency isn’t desirable and foreign-exchange markets will soon see the government’s “strong determination.”
Meanwhile, China’s yuan was steady after the central bank set its daily reference rate at a level that was below market estimates by a record margin in the latest sign of policymakers’ intention to slow the currency’s appreciation. The move came after the offshore yuan strengthened past the psychological milestone of 7 per dollar on Thursday for the first time since September 2024.
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