Emerging markets extend record winning streak to 10 months

Emerging-market stocks just broke a 32-year record. For the first time since 1993, the MSCI Emerging Markets Index is on pace to post 10 consecutive monthly gains, with October adding a solid 4.8% even after a slight 0.2% dip on Friday.

The monster rally has added $6 trillion in shareholder value this year alone, all while the U.S. dollar gets weaker, AI hype refuses to die, and global investors shift away from U.S.-centric plays.

This isn’t just about speculative flows or people throwing darts at a chart. As Cryptopolitan has extensively covered, the gains have been driven by hard infrastructure; Asian semiconductor firms, hardware producers, and data center supply chains.

They’re all riding the wave of insane global demand for AI infrastructure, and the U.S. isn’t the only one steering this ship.

China’s own targeted stimulus is helping pump earnings estimates, boost sentiment, and attract serious capital.

According to data from Bloomberg, earnings estimates for companies in the MSCI are now at their highest since February 2022, quickly closing its gap in valuation with U.S. and European stocks.

Capital flows shift as AI and dollar weakness collide

Meanwhile, money managers are ditching the old playbook, as the weakening dollar is making U.S. assets less attractive, thanks to Donald Trump’s hawkish trade stance that has investors looking for safety elsewhere.

“The weakening of the US dollar has been a big driver,” said Sammy Suzuki of AllianceBernstein. “EM stocks are no longer simply banks, commodities and telecom. Tech, consumer, and medical sectors with more intellectual property content occupy much larger weights today.”

In short: EM’s 31% year-to-date rally in the MSCI gauge marks the biggest annual surge since 2017. And naturally, AI-related stocks are doing half the heavy lifting.

This little change in earnings power and sector dominance is why even firms like Morgan Stanley are now saying it’s the start of a multi-year rally in emerging markets.

The MSCI benchmark trades at a 39% discount, way down from the 45% discount at the start of the year, based on forward price-to-earnings ratios. That’s cold, hard multiple compression.

Trump-Xi truce triggers risk-on mood across global markets

This month’s rally didn’t just come from tech and earnings. It got a final push from Trump and Xi Jinping’s latest meeting, which ended with a temporary trade truce. No major details were shared, but the tone was enough to spark a rally.

“The bottom line is that even though there have been little incremental detail, the optimistic tone of President Trump and the announcement of trade deals have helped remove some uncertainty this week, which has further fueled risk-on sentiment in equities globally,” wrote Citigroup strategist Rohit Garg.

Japan’s stock market was first to react. On Friday, the Nikkei 225 rose over 1%, hitting a new record, and the Topix added 0.79%. South Korea’s Kospi gained 0.22%, notching another record after Thursday’s surge.

The Kosdaq rose 0.47%, and Australia’s S&P/ASX 200 opened up 0.45% higher. China’s CSI 300 stayed flat, while Hong Kong’s Hang Seng slipped 0.33%.

Over in the U.S., Big Tech earnings helped fuel Thursday night’s stock futures. Dow futures rose 17 points, the S&P gained 0.5%, and the Nasdaq 100 climbed 1%. Weekly and monthly gains followed. S&P 500 is up 0.45% this week.

The Nasdaq has jumped 1.6%, and the Dow rose 0.7%. For October, the S&P is up 2%, the Nasdaq gained 4.1%, and the Dow is ahead by 2.4%, putting the Dow on track for six straight months of gains, a feat not seen since 2018.

On the African front, Nigeria made its own waves. The country slapped a 15% import duty on refined petroleum products. It’s a protectionist move, meant to shield local refiners. The market response was cautious, but investors are now watching Nigerian assets more closely as the impact plays out.

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