Emerging market equities delivered a strong start to the year, with the MSCI Emerging Markets Index rising 8.9% for the month and outperforming developed markets. A weaker US dollar and continued strength in technology-related sectors supported returns. Semiconductor demand and optimism around artificial intelligence (AI) were key contributors as demand expectations improved, while geopolitical risks in Eastern Europe and the Middle East remained a secondary concern for markets. 

Emerging Asia posted robust gains, led primarily by technology-driven performance. China was one of the main contributors, supported by policy stimulus, improving liquidity conditions, and increased focus on domestic AI innovation. The MSCI China Index rose 4.7% over the month. 

Taiwan was a standout performer, with the benchmark TAIEX climbing 10.5%, outperforming both China and the broader emerging markets index. Strength in semiconductor companies drove returns, with market heavyweight Taiwan Semiconductor Manufacturing Co. among the leading contributors. South Korea also benefited from strong technology performance, supported by companies such as SK Hynix, which advanced approximately 40% amid improving memory chip demand and positive sentiment around AI-related hardware investment. South Korea’s defence companies also contributed meaningfully to gains, bolstered by rising global military spending. 

Elsewhere in Asia, India faced pressure amid valuation concerns, capital outflows, and weak quarterly earnings. Limited progress in trade negotiations with the United States further weighed on sentiment, resulting in India being among the weakest performers for the month.  Indonesia also struggled, facing pressure from increasing market governance concerns, the resignation of key regulators and falling commodity prices. The stock market experienced a rapid sell-off following reports of a possible downgrade to frontier market status, adding further pressure on its equity market. 

Middle Eastern equity markets generally moved higher, supported by firm energy prices and structural reforms aimed at attracting foreign investment. Saudi Arabian equities edged higher after the kingdom opened its financial markets to all foreign investors to boost capital inflows. Egyptian stocks surged, driven by renewed foreign inflows, stronger investor confidence and clear progress of structural reform. The UAE and Turkey also ended the month in positive territory.  

Latin America was among the strongest-performing emerging market regions, with the MSCI EM Latin America Index rising 15.4% over the month. Gains were supported by firm commodity demand, currency strength, and external tailwinds from a weaker US dollar. Mexico benefited from rising commodity prices, while Brazil’s resilient exports and moderating inflation data reinforced positive investor sentiment.  The region’s performance reflected renewed investor interest in commodity-linked markets amid improving global growth expectations.  

Emerging Europe delivered positive returns, while South Africa finished slightly behind the broader emerging markets index, supported by strength in financials and large cap technology stocks.