EMERGING MARKETS-EM stocks set to end week higher on Iran peace hopes; Turkish assets in focus

Emerging market currencies were ‌mixed on ​Friday and most equities gained as investors weighedprospects fora peace deal in the Middle East even as great uncertainty persisted, while Turkish assets were in focus after another blow to the country's opposition. MSCI's index tracking global EM stocks ‌added 0.7%, set for weekly gains, while the currencies gauge was flat.

A court effectively ousted the main opposition leader in Turkey late on Thursday, annulling the 2023 party congress that elected him chairman, boostingPresident Tayyip Erdogan's chances of extending his rule. "With this political risk, it gives the impression that maybe in a situation that is less ‌positive for Turkey... Erdogan could change his economic policies," said Guillaume Tresca, global EM strategist at Generali Asset Management.

"I used to like this carry trade ‌very much, but clearly now the risk-reward is less appealing than before." Turkey's BIST 100 fell as much as 6% following the ruling, triggering a market-wide circuit breaker. On Friday, the index was up 1.5% in volatile trading, still set for its biggest weekly fall in a year.

The lira depreciated 0.4% to a record low of 45.74 per dollar. Iranian media reported the nation's foreign minister met Pakistan's ⁠interior minister ​to discuss proposals to end the war. ⁠Despite ongoing talks, uncertainty persisted as the U.S. and Iran held opposing stances on key issues, including on enriched uranium and control over the Strait of Hormuz.

Heavyweight Asian stocks rose broadly. ⁠Taiwan equities led gains with a 2.2% rise, riding investors' insatiable appetite for AI-linked stocks. On the flip side, concerns around Indonesia's fiscal health amid elevated crude prices and plans to centralize ​commodity exports pressured the nation's assets this week.

Local stocks rebounded 1.1% after eight sessions of declines, but were on track for their biggest ⁠weekly decline since May 2022. The rupiah was close to record lows hit in the previous session at 17,690 versus the dollar. Tresca said that the macro story in Asian economies had been resilient, with ⁠positive ​AI momentum, but a prolonged closure of the Strait of Hormuz would start to hurt at some point.

Emerging European equities rose, tracking global market sentiment. Polish stocks gained 0.6%, while Hungarian and Romanian bourses dipped 0.2% each. Their currencies were largely subdued against the euro, while Hungary's forint continued to weaken, down 0.6%.

In ⁠South Africa, stocks were little changed and the rand weakened 0.3%. Moody's is scheduled to review its rating on Hungary and South Africa later in the day.

HIGHLIGHTS: ** ⁠India central bank not in favour ⁠of rate hikes to defend rupee, prioritises inflation, sources say

** Philippine central bank governor says it is considering off-cycle rate hike ** Kenyan public transport operators call off strike after government cuts diesel price

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For TURKISH ‌market report, see For RUSSIAN market report, see

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