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(Bloomberg) — Emerging-market stocks advanced for the third day this week as technology companies in Taiwan and China joined a hot streak by South Korean peers, buoyed by optimism that talks between the US and China will improve trade ties and boost demand for artificial intelligence-related hardware and services.
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The benchmark MSCI EM equity index rose 0.7%, extending this month’s gains to more than 7%. Taiwan Semiconductor Manufacturing Co. Ltd., Alibaba Group Holding Ltd. and Samsung Electronics Co. Ltd. contributed 105% of the gauge’s gains, meaning it would be trading lower but for those three stocks.
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Chipmakers have led the rebound in stocks since the beginning of April, as earnings upgrades overshadowed concerns about inflation sparked by the Iran war. Expectations of a thaw in US-China relations during President Donald Trump’s summit with Xi Jinping backed demand for AI-related companies, as the Chinese leader signaled that Beijing may be open to business deals and purchasing commitments.
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While the information technology index jumped 1.4% on Thursday, other sectors including utilities, energy and industrials fell, marking the gap between Asian tech and the rest of emerging market stocks.
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“Emerging-market stocks are completely bifurcated into AI and non-AI,” said Kamil Dimmich, a partner at North of South Capital. “As long as US hyperscalers and AI companies continue to grow their capex, this is not likely to change as earnings at their Korean and Taiwanese suppliers eclipse everything else.”
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Emerging-market currencies were largely steady as the dollar traded flat. The Turkish lira retreated for the sixth day after the central bank revised its inflation forecast for the end of 2026 to 24% from 16%, citing the US-Israeli war on Iran and its impact on prices.
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The Hungarian forint fell for a third day following a central bank move to lower the interest rate on its foreign-currency swaps. The nation’s 10-year benchmark forint bond yield fell 13 basis points to 5.74% after newly-elected Prime Minister Peter Magyar said his cabinet will temporarily block any non-essential spending due to the “disgraceful” state of the budget he inherited from former leader Viktor Orban.
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