Emerging-market stocks rallied for a ninth straight month, the longest winning streak since 2004, as inflows accelerate and investors continue to pour money into Asian technology shares.
The advance extended into Tuesday, with an MSCI Inc. gauge for developing-nation equities ending the day 0.5% higher, lifting month-to-date returns to 7%. Hong-Kong listed Alibaba Group Holding Ltd. and Tencent Holdings Ltd. were the biggest advancers alongside chipmaker Taiwan Semiconductor Manufacturing Co.
Investors largely shrugged off a JOLTS report that showed US job openings barely rose in August, while monitoring signs of a potential US government shutdown. The rally in emerging markets has been fueled by expectations of a weak dollar environment, interest rate cuts by the Federal Reserve and evidence of a turnaround in index heavyweight China.
“Nothing ever goes straight up, without volatility,” said Malcolm Dorson, senior portfolio manager and head of active management at Global X Management in New York. “But we might be seeing the first inning of a new cycle favoring emerging markets.”
Asian technology stocks have been benefiting from optimism around companies linked to artificial intelligence developments. Global investors remain relatively underexposed to Chinese shares, leaving more room to extend their advance, according to Ipek Ozkardeskaya, a senior analyst at Swissquote.
“Chinese tech stocks, despite a strong rally this year, still trade at cheaper valuations than their US peers, where stretched multiples are becoming a concern,” she said.
An index of emerging-market currencies was little changed on Tuesday, with most EM currencies gaining against the dollar.
“We advise investors to look past shutdown fears and focus on other market drivers, such as the mix of continued Fed rate cuts, strong corporate earnings and robust AI capex and monetization,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
Israeli bonds and stocks advanced after President Donald Trump and Israeli Prime Minister Benjamin Netanyahu said they had agreed to a 20-point plan designed to end the war in Gaza. The shekel dropped, paring some of its gains from the previous day.
In credit markets, Kuwait tapped international bond investors for the first time in eight years with an $11.25 billion debt sale, while Egypt offered a $1.5 billion transaction.