(Bloomberg) -- Emerging-market stocks closed at the highest level in six months as a rally in chipmaker Nvidia Corp. helped boost shares of artificial intelligence-linked companies around the globe. 

The MSCI Emerging Markets Index rose 0.9% in an advance led by Taiwan Semiconductor Manufacturing Company, Ltd. which benefits from demand for artificial intelligence. Developing-nation currencies, meantime, edged lower, tracking the advance in the greenback.

“Taiwan is moving with the Nvidia story and demand for chips and semis,” said Malcolm Dorson, an investor at Global X Management Company in New York. “The strength of the dollar has historically been the strongest driver for EM equities and FX forecasters are beginning to price in the end of the Fed rate hiking cycle and a complicated election season.” 

Developing-nation equities are rebounding from the worst start to a year since 2016 as a stimulus plan steadies sentiment toward Chinese stocks and a spillover from the US technology rally boosts Asian companies. Investors remain concerned, however, about lingering risks such as a deflationary spiral in the world’s second-biggest economy, a push-back in the bets for Fed easing and political risks stemming from a packed election calendar.

Chinese stocks posted muted gains in response to further supportive measures from the government. In their latest move, authorities prohibited major institutional investors from reducing equity holdings at the open and close of each trading day. 

Meantime, in Turkey, the lira halted a four-day losing streak after the new central bank governor kept interest rates unchanged. Sri Lanka’s dollar bonds extended gains for a third day as the country sent a new restructuring proposal to dollar bondholders. 

In Egypt, dollar debt gained as as the IMF said its policy package talks are making “excellent progress.” Pakistan, meanwhile, plans to seek a new loan of at least $6 billion from the Fund to help the incoming government repay billions of dollars in debt due this year, according to a Pakistani official. 

Panama, Mexico, Venezuela 

Panama is offering a record $3.1 billion in bonds ahead of a pivotal presidential election. Existing notes from the nation rallied on Thursday as firms from Morgan Stanely to Barclays recommended clients add exposure.

Latin American currencies largely weakened, with the Mexican peso one of the biggest laggards among emerging-market peers as inflation eased much more than expected earlier this month, reinforcing bets that the central bank will kick off the easing cycle next month. Minutes from the last meeting published Thursday showed policymakers split over the outlook for consumer prices. 

Bonds from Venezuela and its state-oil company rallied after JPMorgan said the debt will re-enter its widely followed emerging-market debt indices following US sanction relief late last year. Ecuadorean bonds gained as traders digested President Daniel Noboa’s budget, which targets a smaller fiscal deficit as the government hopes for a program with the International Monetary Fund. 

(Updates with market moves throughout)

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