EM Stocks Hit All-Time High as AI and Weakening Dollar Drive Rotation (MSCI EM: +1%, DJD: -4%)

Emerging-market equities reached an all-time high on Wednesday, with the MSCI Emerging Markets Index climbing as much as 1% to 1565.05, matching a record set in late January. Asian shares also touched a record, led by strong performance in semiconductors and AI-related hardware. The rally follows more than 30% gains in EM equities last year and is supported by a weakening U.S. dollar and rotation out of crowded U.S. tech. The Bloomberg Dollar Spot Index is 4% below its November peak, while EM currencies gained 0.2% on the gauge. However, outflows from South Korea stocks reached $6.6 billion this year despite a 27% gain, and India and Indonesia see foreign selling. Goldman Sachs and other strategists caution that while sentiment is high, allocations remain light.