(Bloomberg) — Emerging-market stocks headed for the longest winning streak in a month amid optimism for a robust earnings-reporting season driven by artificial intelligence and China’s stimulus measures.
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The MSCI Emerging Markets Index rose for a third day, cementing its strongest level since June 2022. Tencent Holdings Ltd. and Alibaba Group Holding Ltd. accounted for more than a third of the gains. The gauge is up 1.8% in April, on course for a third successive monthly rally, a feat it hasn’t achieved since February 2021.
Developing-nation equities have added about $2 trillion in the past 11 weeks as China unveiled measures to halt a deflationary spiral in the world’s second-biggest economy, and a craze for AI-linked stocks brought billions in inflows into countries such as Taiwan and South Korea. Upcoming corporate earnings reports may show whether Beijing’s $728 billion plan is working to revive activity.
A gauge of Hong Kong-listed Chinese enterprise stocks entered a technical bull market, having increased more than 20% since a bear-market low in January. Equity sentiment was boosted by analyst comments citing increased demand for electric vehicles in the first week of April. EV maker Xpeng Inc. jumped 7.7%, taking its two-day rally to 14%.
Tech and gaming-company stocks also gained after China approved 14 imported online games in April, quickly following an earlier set of approvals made in February. Citigroup Inc. said it was “constructive” on China’s online-gaming industry.
Taiwan Semiconductor Manufacturing Co. reported the fastest sales growth since 2022. The company at the core of emerging-market AI said it’s budgeting capital expenditure of $28 billion to $32 billion and expects revenue to grow at least 20% this year.
Meanwhile, trading across emerging markets was quiet and range-bound, with investors bracing for the US CPI report. Trading in the MSCI EM index was 36% below its 30-day average at 9:54 a.m. in London. Money-market bets for the pace and timing of Federal Reserve easing have fluctuated in recent weeks as strong economic data contradicted dovish signals coming from the US central bank.
MSCI’s gauge of emerging-market currencies edged higher, with Mexico’s peso leading the advance. The rand plunged as much as 0.9% after the lates opinion poll showed support for the ruling African National Congress plunging below 30% in next month’s election.
The Czech koruna advanced for the first time in three days after data showed the country’s inflation stayed within target range, allowing room for further easing by policymakers. Ghana was also set to report its consumer-price data amid concern the rate may have further increased to 26.4%, validating the central bank’s decision in late March to hold its benchmark rates steady at 29%.
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