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EM stocks up 0.7%, FX flat

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Turkish industrial production drops 2.1% in December

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Hungary's forint slips from over 2-year peak

By Pranav Kashyap

(Reuters) -

Most central and eastern European currencies held their

ground on Tuesday, while regional stocks were mixed as investors

braced for a data-heavy week.

MSCI's index tracking global EM stocks rose 0.7%

and was up for a second straight session to ‌hit a more than

one-week high, while a similar gauge for

currencies was flat.

Hungary's forint briefly notched its strongest

level in more than two years ​before falling 0.4%. After hovering

near two-year highs in recent sessions, the currency could face

fresh headwinds if ‍January inflation data, due Thursday, comes

in sharply lower. A softer inflation ⁠print would only strengthen

the case ⁠for renewed rate cuts, potentially taking some wind out

of the forint's uptick.

Investors will get further insights on the central bank's

thinking when ‌minutes from its January meeting land on

Wednesday. Adding to ​the backdrop, Hungary is also heading

toward a national election in early April.

Budapest shares were flat, while Warsaw equities

rose 0.2%.

The Polish zloty, one of the region's laggards ⁠so

far this year, slipped from a more than ‍one-week high notched ​in

the prior session as traders positioned ahead of the release of

the country's inflation data later this week.

Regional equities have started the year on a strong

note, with Hungary up 17%, ‍Romania up 12.3% and Poland

up 7.6%.

That easily outpaces the U.S. S&P 500's roughly 0.5%

rise, highlighting a rotation that analysts say still has room

to grow as investors trim exposure to pricey U.S. tech and hunt

for value in overlooked corners of the market.

"There are several reasons to like EM equities right now. We

put the most weight on the potential for further dollar

weakness, accelerating earnings, and exposure to ​the global ‍AI

supply chain," LPL Financial analysts said.

"In 2026, EM earnings are expected to grow 29%, more than

double current earnings growth expectations for the U.S. at 14%.

EM valuations remain compelling."

Turkish stocks, ​which are up nearly 23%

year-to-date, were down 0.14%. The central bank is expected to

revise its 2026 inflation forecasts higher this week and may

slow, or even pause, rate cuts in the months ahead. Meanwhile,

December industrial production fell 2.1%.

In South Africa, the rand retreated from a more than

one-week high as prices of precious metals cooled.

Russia's rouble hovered near a three-week low ahead

of a policy decision later this week. The central bank is

expected to keep rates ​unchanged, after January data showed

price growth picking up again.

In emerging Asia, stocks were mixed after strong gains in

the previous session. Philippine shares closed at their

highest level in more than three weeks, while Thai equities

extended gains on hopes that the weekend election ‍could

pave the way for greater political stability and pro-growth

reforms.

(Reporting by Pranav Kashyap in Bengaluru; Editing by Anil

D'Silva)