EMERGING MARKETS-Stocks gain, FX steady as investors eye Middle East ceasefire

By Johann M Cherian

April 16 (Reuters) - Stocks in most emerging markets rose on Thursday, while currencies were largely steady as investors bet on prospects of a Middle East peace deal that could restore shipping flows and ease oil supply disruptions through the region.

MSCI's index tracking equities in developing economies .MSCIEF gained 1.2% and was just shy of its level before the war started in late February, while a gauge for currencies .MIEM00000CUS was flat against the dollar.

Israel's cabinet met to discuss a possible ceasefire with Lebanon, a key sticking point in earlier negotiations, while U.S. and Iranian officials were mulling potential negotiations in Pakistan as early as this weekend.

Prices of crude oil, a key resource for developing economies, were choppy between $90 and $100 a barrel, as investors mulled a Reuters report that among the proposals Tehran offered to Washington was that Iran would allow ships to sail freely through the Omani side of the Strait of Hormuz without the risk of attack.

The waterway's closure has kept oil prices near $100 a barrel, raising concerns about the impact on the global economy.

CHINA'S ECONOMY OUTPACES REGION

Data on Thursday showed China's economy rode an export surge before the conflict began, with GDP growth accelerating to 5.0% in the first quarter of 2026. But all eyes now are on the impact of higher energy costs on domestic and global demand.

The offshore yuan CNH= was steady against the dollar, while benchmark stocks in Shanghai .SSEC, .CSI300 added 0.7% and 1.1%, respectively. Hong Kong equities .HSI advanced 1.7%.

"The Iran war is increasingly emerging as a double-edged sword," Tommy Xie Hongming, head of Asia macro research at OCBC, said in a note.

"On the one hand, supply-side disruptions are becoming visible. On the other hand, substitution effects are beginning to kick in."

The International Monetary Fund said it expects at least a dozen countries, including several in sub-Saharan Africa, to seek new loan programmes to cope with surging energy prices and supply chain disruptions caused by the conflict.

The effect on net-energy importers in Asia has been the most severe, while energy exporters are likely to have benefitted.

Thailand cut its growth forecasts for 2026 to 1.3% from 1.9% hurt by energy costs and lower tourism from Gulf countries, which have already prompted foreign investors to reduce their exposure to the country's assets. The country's equities index .SETI logged its biggest monthly loss in more than a year in March.

On the other hand, energy exporters such as Nigeria and Russia could benefit as they export crude at higher prices. Nigeria's naira NGN= has gained 7% this year, while the Russian rouble RUB= has appreciated 7% this month alone.

Others, including Turkey, have voiced caution, saying that a monetary response by any central bank globally in the face of supply shocks could weaken economic activity. The lira TRYTOM=D4 has lost 4% this year and is hovering at a record low.

The World Bank Group’s private-sector arm, the International Finance Corporation, and U.S. bank Citigroup signed a new 1.6 billion rand ($98 million) borrowing facility aimed at expanding local-currency financing in South Africa, which would help mitigate currency risks for local businesses. The rand ZAR= was steady on Thursday.

Meanwhile, TSMC's U.S.-listed shares TSM.N, <2330.TW> added nearly 1% after the Taiwanese chip giant announced a record profit in the first quarter and forecast second-quarter sales would hit a historic high, benefitting from the AI boom.