The new financial year, 2026, has kicked off with a powerful rally for emerging market equities in Asia, propelled primarily by significant gains in the technology sector. While stock indices climbed, most regional currencies, including the South Korean won, exhibited limited movement, trading within narrow bands. The trading day was marked by a notable debut for a Chinese AI chipmaker and strong comments from South Korea's top central banker regarding currency market stability.
Tech-Powered Rally Lifts EM Index
The MSCI emerging markets index jumped as much as 1.1% on Friday, January 2, 2026, reaching its highest point since late October 2025. This positive start extends the impressive momentum from the previous year, where the index soared over 30%, outperforming global benchmarks largely due to widespread optimism surrounding artificial intelligence. In contrast, a key index tracking emerging market currencies showed little change, even as the US dollar softened slightly. The equity gains occurred amid thin trading volumes, with several major markets including Japan, New Zealand, China, and Thailand closed for holidays.
Standout Performers and IPO Success
The technology sector was the undisputed leader of the day's advance. In a stunning market debut on the Hong Kong exchange, shares of Shanghai Biren Technology Co., a designer of artificial-intelligence chips, skyrocketed by 82%. This surge followed the company's successful initial public offering, which raised $717 million, highlighting China's determined push to build a self-reliant semiconductor industry. Established giants also contributed to the rally, with shares of South Korea's Samsung Electronics Co. and Taiwan's Taiwan Semiconductor Manufacturing Co. (TSMC) trading higher.
South Korea's Firm Stance on Won Volatility
Amid the equity cheer, currency markets told a different story in South Korea. The won weakened by 0.2% to trade at 1442.14 against the US dollar, ranking it among the day's worst-performing Asian currencies. This depreciation persisted even as the country's domestic stock market climbed to a record high. Addressing this disconnect, Bank of Korea Governor Rhee Chang Yong delivered a firm message.
Governor Rhee stated that the recent weakness of the Korean won does not accurately reflect the underlying strength of the nation's economy. He explicitly vowed that the central bank would "oppose any US investment decisions that could threaten the stability of the currency market." His comments come after a period of significant volatility for the won, which had recently slid toward levels last seen during the global financial crisis.
"While it is difficult to identify a precise appropriate exchange rate level, the recent rise into the upper 1,400s appears to be substantially misaligned with our economic fundamentals," Rhee asserted on Friday. This clear warning signals the authorities' readiness to intervene should the currency's movement become disorderly or threaten financial stability.
Market Outlook and Implications
The first trading day of 2026 has set a confident tone for emerging market assets in Asia, reinforcing the bullish narrative around technology and AI. However, the simultaneous caution expressed by South Korea's central bank underscores the persistent challenges and divergent pressures facing regional economies. Investors are now navigating a landscape where roaring equity markets coexist with central banks vigilant about currency stability and external shocks. The performance in the coming weeks will test whether the early-year optimism can be sustained alongside these macroeconomic safeguards.
