Executive Summary

Key insights and market outlook

Asian emerging markets started 2026 on a strong note with MSCI Asia emerging markets index rising 2% ¹

. Indonesia's IHSG surged 1.17% to 8,748 ²⁴, while Taiwan and South Korea hit record highs. The Hang Seng index jumped 2.8% to 26,338.47 ⁵. Positive momentum driven by AI sector optimism and potential January Effect.

Full Analysis

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Deep Dive Analysis

Asian Markets Rally to Start 2026 on Strong Economic Optimism

Regional Gains Highlight Strong Start

The first trading day of 2026 saw significant gains across major Asian markets, driven by renewed optimism in the technology and AI sectors. The MSCI Asia emerging markets index rose by 2% ¹

, reaching its highest level since late October. Indonesia's IHSG led the regional gains, surging 1.17% to 8,748.13 ²⁴ on the back of strong performance across various sectors.

Sectoral Performance Highlights

The transportation sector led Indonesia's gains with a 6.56% increase, followed by technology stocks rising 4.47% and consumer cyclicals up 3.47% ⁴

. In Hong Kong, the Hang Seng index jumped 2.8% to 26,338.47 ⁵, its highest level in 1.5 months, driven by a 4% rise in technology stocks and a 3.7% gain in AI-related stocks.

Currency Movements

The Asian currency market showed mixed movements against the US dollar. The Thai baht led gains with a 0.61% appreciation to 31.39 ³

, while the Chinese yuan rose 0.10% to 6.98. In contrast, the Indian rupee depreciated 0.28% to 90.22, and the Japanese yen fell 0.11% to 156.92 ³.

Market Outlook and January Effect

Market analysts predict continued positive momentum in January 2026, citing the potential for the January Effect to drive further gains. The IHSG is forecasted to potentially reach the 9,000 level if positive catalysts materialize ⁶

. Experts from Kisi Sekuritas and BRI Danareksa Sekuritas note that the January Effect could be significant this year, driven by foreign fund inflows and rotation from second-tier stocks to blue-chip companies.

References