A 32-Year Longest Rally Period Has Started in Emerging Markets.

Emerging Markets Are Growing

MSCI Emerging Markets Index has gained value due to significant developments in the artificial intelligence sector and the weakening of the dollar. The index rose 4.8 percent this month, continuing its upward trend. The index, which has gained value every month from January to October, has repeated a success streak last observed in 1993.

Innovative Sectors Stand Out

Securities in the semiconductor, hardware, and data center supply chain sectors in Asia have seen increases alongside global demand for artificial intelligence, while emerging market stocks provided significant gains returning $6 trillion to investors. Sammy Suzuki, Head of Emerging Market Equities at AllianceBernstein, emphasized that the weakening of the dollar is a critical factor in the positive developments of the index.

The Rally Continues

The stock market rally in emerging markets continues unabated. Year-to-date, the index's return has increased by 31 percent, marking the strongest annual increase since 2017. Approximately half of this increase comes from AI-focused stocks. This situation underscores the significant transformation of emerging markets over the last decade from commodity-heavy markets to technology and consumer-focused systems.

Outperforming U.S. Stocks

Moreover, emerging market stocks have outperformed U.S. stocks for the first time in eight years. Morgan Stanley stated that this is just the beginning. Earnings forecasts for companies in the MSCI index have reached their highest level since February 2022, thus narrowing the gap between emerging market stocks and U.S. stocks. This index is currently trading at a 39 percent discount based on forward price-to-earnings ratios, down from 45 percent at the beginning of the year.