Emerging Market Trends: A Mixed Bag of Gains and Geopolitical Strains

Emerging-market stocks and currencies faced slight declines but ended February with overall gains fueled by rate decisions and AI trade concerns. Despite geopolitical tensions and market volatility, the equity index showed resilience, with Morgan Stanley optimistic about performance. Inflation readings highlighted economic stability, especially in South Korea and Turkey.

Emerging-market stocks and currencies took a hit on Friday, closing February with gains despite a turbulent landscape dominated by interest rate decisions and artificial intelligence concerns. The benchmark EM equity index dropped by 0.5% after a seven-day winning streak, while EM currencies fell by 0.3%, ending a five-day rise.

Stock performance was mixed across regions. In central and eastern Europe, Romanian equities increased by 0.6% with the leu remaining stable. Meanwhile, South Korean equities led an upward charge, gaining nearly 50% this year, and Pakistan saw a 0.3% drop in equities amidst geopolitical strains.

Market analysts, like Adam Kurpiel from Societe Generale, attribute these fluctuations to a mix of influences, including AI trade fears and geopolitical tensions. Nonetheless, inflation readings across the emerging markets indicated ongoing economic resilience, bolstering sentiment and poised to support further gains.

(With inputs from agencies.)