Emerging Markets Shine Despite Global Uncertainties

Emerging market stocks saw significant gains, driven by strength in Asia as markets anticipated a positive end to the year. Despite lower liquidity due to holidays, China's policy support and geopolitical risks are focal points for investors. The MSCI index shows strong performance, though future challenges persist.

Stocks in emerging markets surged at the beginning of the final week of 2025, benefiting from robust Asian markets despite the seasonal lull in global trade liquidity. The asset class anticipates its strongest annual performance since 2017, though investors remain cautious about 2026 due to geopolitical tensions and China's economic policy direction.

On Monday, MSCI's emerging markets equities index increased by 0.4%, trending towards an annual gain of nearly 30%. Kamakshya Trivedi, a strategist at Goldman Sachs, noted that the exceptional returns this year set a high benchmark for 2026. The yuan experienced slight losses against the dollar amid state media warnings against currency surge.

Regional markets showed mixed results as Chinese stocks exhibited diverse trends. Taiwan's equities benchmark climbed to a record high, with South Korean stocks also rising notably. Meanwhile, South African stocks and the rand paused their strong rally, while U.S. President Donald Trump and Ukraine's President continue seeking a war resolution.

(With inputs from agencies.)