Bloomberg
(Bloomberg) — Emerging-market stocks kicked off 2026 with their strongest start in years, climbing close to a five-year high as optimism about Asia’s growing role in artificial intelligence propelled the region’s technology shares.
The MSCI Inc.’s index of developing nations rose 1.7% on the first trading day of the year, reaching its highest level since February 2021. In the meantime, its currency counterpart was flat.
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The stocks rally underscores investor enthusiasm for AI-related assets, which is dominating global equity narratives at the start of the year. Technology shares were at the forefront, up 2.8%, buoyed by excitement around new listings and advances tied to the technology.
“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, senior ETF strategist at Strategas Securities. “That’s where EM fits 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 was up just 0.3%.
Though the MSCI Emerging Markets Currency index showed little direction as traders focused on expectations for Federal Reserve easing, Brazil’s real surged 1%, while Mexico’s peso advanced 0.6%
The rand touched the strongest level versus the greenback since 2022 amid optimism over market-friendly reforms and climbing prices for raw metals, which the nation exports.
Meantime, the Argentine peso was one of the weakest performers in Latin America, with the currency declining more than 1% at the start of a new exchange-rate regime. The changes, which take effect today, 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.
Colombia’s peso swung between gains and losses. The country’s currency and dollar bonds, which were under pressure after the government announced a sharp increase in the minimum wage last week, took another hit after the Labor Ministry said the government is mulling measures to prevent inflation, including price controls. Short-term swaps rose.
Elsewhere, Senegal’s dollar bonds led gains among global EM peers after the country’s finance minister indicated progress toward a new credit facility with the International Monetary Fund.
