This article first appeared on GuruFocus.
Emerging-market momentum is quietly building, with investors pointing to Saudi reforms and Chinese tech as the twin engines behind the latest rally. The MSCI EM equity benchmark rose 0.4%, marking its third consecutive advance and touching the highest level since July 2021. Analysts noted that Saudi Arabia’s Tadawul All Share Index surged as much as 5%, adding about $123 billion in value, after reports that majority foreign ownership could be approved before year-end. At the same time, Alibaba (NYSE:BABA) shares jumped to a four-year high following an increase in AI spending, while Tencent added further strength to the tech-led upswing.
Yet, currency markets told a different story. The MSCI EM FX index slipped for a fifth straight session as the dollar regained ground, with the Bloomberg dollar index up 0.4% after two days of losses. Federal Reserve Chair Jerome Powell’s cautious remarks were seen as dampening appetite for risk, with traders highlighting his view that policymakers face a challenging situation balancing inflation and employment. The Polish zloty led losses in Eastern Europe amid renewed geopolitical strains tied to Russian airspace incursions near NATO territory, while the Thai baht weakened as export growth slowed to its weakest pace in nearly a year under pressure from US tariffs.
Attention is now shifting to policy signals in Europe. The Czech National Bank is widely expected to keep rates steady, but analysts say a hawkish tone from the board could support the koruna, which has already been one of the strongest performers this year against both the dollar and the euro. Market watchers suggest Powell’s reluctance to commit to a rate cut next month could continue to weigh on sentiment, even as optimism grows that Saudi reforms and China’s tech push could draw significant new inflows into emerging-market assets.