Emerging Asian stocks reclaimed pre-Iran war levels on Thursday as optimism grew over a possible deal to end the conflict, with reports that Tehran may allow shipping through the Strait of Hormuz sending oil prices lower and boosting risk appetite.
The MSCI gauges tracking EM Asia equities and global emerging market stocks rose more than 1% each, touching their highest levels since February 27.
South Korea's KOSPI led the pack in emerging Asia, rising 2% to its highest level since February 27.
Taiwan's stocks jumped more than 1% to a record high on expectations of strong corporate earnings. Taiwan Semiconductor Manufacturing Co (TSMC), the world's top contract chipmaker, is expected to log a 50% surge in quarterly net profit on strong demand for its advanced chips when it reports earnings later on Thursday.
Stocks in Thailand shed as much as 0.9% as trading resumed after a long holiday. They however recouped most of the early losses to trade slightly lower.
The Bank of Thailand earlier in the day cut its growth forecast for 2026, saying Southeast Asia's second-largest economy faces slower growth this year due to the Middle East war.
"A lowered growth projection for Thailand could provide some support for Thai assets, since it could lead to growing expectations of rate hold from the Bank of Thailand rather than the current market pricing of rate hike," said Poon Panichpibool, a market strategist at Krungthai Bank.
The Thai baht appreciated on the day to 31.87 per U.S. dollar, the highest since March 12.
Elsewhere in Southeast Asia, stocks in the Philippines gained as much as 0.6%, while those in Singapore gave up early gains to trade flat.
"The sentiment across the Asia market seems to be quite positive, which could be carried over from the bullish sentiment in the U.S. market overnight due to some hopes for a second round of peace negotiation between the U.S. and Iran," Panichpibool said.
In Peru, the sol depreciated sharply overnight to a more than one-week low, while MSCI's benchmark for Peru's share index tumbled more than 7% as uncertainties prevailed over the election outcome in the Latin American country.
Currencies in emerging Asia also staged a recovery on Thursday after a subdued outing in the previous session.
The Taiwan dollar appreciated 0.4%, touching a more than one-month peak. Inki Cho, a financial market strategist at global fintech firm Exness, said growth in the Taiwan dollar was underpinned by robust semiconductor and AI-related export inflows, adding that a "broader USD weakness adds a further tailwind."
The Indonesian rupiah firmed before reversing its gains to loiter around its record low of 17,145 per U.S. dollar.
HIGHLIGHTS:
** Hopes for Middle East peace grow as Israel discusses Lebanon ceasefire
** Foreign investors flee Thailand as Iran war, energy shock dash hope for economic revival
** China's economy rebounds in Q1 but Iran war darkens 2026 outlook - Reuters
