EMERGING MARKETS-EM equities set for fifth week of gains as geopolitical risks subside

By Ragini Mathur and Twesha Dikshit

Jan 23 (Reuters) - Emerging market equities and currencies extended gains on Friday, with some geopolitical jitters subsiding after U.S. President Donald Trump softened his rhetoric towards Europe over Greenland.

The MSCI's gauge of emerging equities .MSCIEF rose 0.3% to notch a fresh all-time high and was set for a fifth week of gains, while the corresponding currencies index .MIEM00000CUS climbed 0.2%.

Both indexes were poised for weekly gains after stalling earlier this week due to Trump's tariff threats against European allies over his push to control Greenland, which sent investors fleeing from risk assets.

Trump rescinded his tariff threats on Wednesday and said that he had secured total and permanent U.S. access to Greenland through a deal with NATO. European Union leaders were ready to revive an EU-U.S. trade deal, while warning they would respond if Trump renewed his threats.

"Demand for risky assets remains robust even if investors must navigate tricky geopolitical waters," said Kathleen Brooks, research director at XTB.

JPMorgan data showed that EM equity funds posted another strong week with $9.6 billion in inflows. The brokerage noted that, while ETFs drove the majority of flows, non-ETF funds also recorded substantial inflows of $1.1 billion — the highest in nearly three years.

REGIONAL STOCKS BROADLY HIGHER

In South Africa, the rand ZAR= ticked up against the dollar while stocks .JTOPI gained 0.2%, with the central bank's interest rate decision awaited next week.

Turkish stocks .XU100 advanced 1.2% to record highs, but the lira TRY= weakened 0.2%. The country's central bank delivered a smaller-than-expected rate cut on Thursday, due to persistent inflationary pressures.

In Central Europe, Hungary's forint EURHUF= fell 0.7% against the euro. The country's unemployment rate held steady at 4.4% in the October-December period.

Poland's zloty EURPLN= dropped 0.2% and its stocks .WIG20 declined 0.6% after hitting an 18-year high in the previous session.

Monetary Policy Council member Iwona Duda told Bloomberg News that Poland may resume interest rate cuts in February or March, while saying room for further easing was limited after last year's cuts.

Romania's benchmark stock index .BETI advanced 0.7%, while the leu EURRON= was flat.

ASIAN MARKETS SHINE

In Asia, South Korea .KS11 and Taiwan .TWII stocks closed at records as easing trade and geopolitical tensions drove AI optimism. Singapore stocks .STI climbed 1.3% to a record.

"Deteriorating diplomatic relations between the U.S. and Europe could attract more inflows to Asia," Brooks noted.

China's yuan strengthened to a near 32-month high against the U.S. dollar after the central bank lifted its official guidance rate above the psychologically important 7-per-dollar mark for the first time since 2023.

For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB