Stocks Reach Highest Levels Since 2021: What This Means for Investors and Businesses at the Start of the New Year
Emerging market stocks reached their highest level in nearly five years during the first trading session of 2026, supported by strong manufacturing data that set a positive tone for the year ahead. This comes as investors face the challenge of exceeding the remarkable gains achieved in 2025.
The MSCI Emerging Market Stock Index rose by 1.6%, while the related currency index edged down slightly by 0.1%.
Market participants are preparing for a complex mix of factors in 2026, including expectations of continued weakness in the US dollar and a maturing artificial intelligence (AI) rally. Potential interest rate cuts by the Federal Reserve could further weaken the dollar and increase demand for emerging market assets. However, some analysts warn that investors may need to be more selective in their investment choices.
For those aiming to capitalize further on the AI sector, attention may focus on clear beneficiaries such as Taiwan, South Korea, and China. This interest was underscored by the debut of Shanghai Biren Technology, a Chinese AI chip designer, whose shares more than doubled in Hong Kong last Friday.
Meanwhile, other experts suggest rebalancing portfolios toward more domestically focused markets like Brazil and India.
Recent Purchasing Managers’ Index (PMI) data from S&P Global revealed renewed factory activity growth in key tech-exporting countries South Korea and Taiwan, ending months of decline in December. Southeast Asian nations also maintained robust growth.
Reflecting this, South Korean shares surged 2.3% and Taiwanese equities climbed 1.3%, with both markets reaching record highs.
Trade and tariff issues will continue to play a crucial role in 2026, particularly influencing sentiment around Asia’s export-driven economies.
In India, where there is still no official announcement on the much-anticipated trade deal with the US, the rupee traded within a narrow range on Friday. Traders reported that state-run banks were actively intervening to support the currency on behalf of the central bank.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The strong start to 2026 in emerging markets, driven by solid manufacturing growth and AI sector momentum, signals valuable opportunities for Omani investors to explore tech-linked and export-driven markets, particularly Taiwan, South Korea, and China. However, the potential for volatile trade dynamics and selective investor positioning calls for cautious, well-informed strategies. Smart entrepreneurs should consider aligning with AI innovation and diversifying into domestic-focused markets like India and Brazil to mitigate risks associated with global trade uncertainties.
