MSCI’s emerging market index rose 0.7percent to its strongest since June 2016, reflecting gains in heavyweights South Korea and Taiwan, where a number of blue chip tech stocks such as Samsung Electronics and Taiwan Semiconductor Manufacturing soared.
The gains came in the wake of strong earnings from Google, Amazon and Microsoft last week and against a slight easing in tensions over the Korean peninsula as US President Donald Trump opened the door to meeting North Korea’s Kim Jong Un.
Markets shrugged off data showing that China's factory sector lost momentum in April, with growth slowing to its weakest pace in seven months, as domestic and export demand faltered and commodity prices fell. US factory activity also slowed in April.
“You've seen some disappointing figures coming out of the US and China,” said Per Hammarlund, chief emerging markets strategist at SEB.
“It was unreasonable to expect that the relatively high numbers we saw in March, when PMI numbers have been running well ahead of actual growth numbers,” could be repeated, he said.
Currencies also recorded a strong session with the dollar treading water as many markets reopened after a long holiday weekend.
South Africa's rand snapped a five-day losing streak to strengthen 1percent against the dollar.
The gains came after President Jacob Zuma made a hasty exit from a May Day rally organised by labour federation Cosatu on Monday.
The crowd of workers became rowdy, with some booing and chanting slogans against him.
“Zuma still has the support within the ANC - not among all ANC members, but within the decision-making body in the ANC. He has enough allies within that body to keep him in power until the next presidential election,” said Hammarlund.
Turkey’s lira gained 0.6percent, while Mexico’s peso extended its gains for a fourth straight session, strengthening 0.2 percent as investors saw the threat of protectionist measures from the US administration recede.
However, emerging European currencies slightly eased against the euro across the board, despite manufacturing data that was in line, or a touch stronger than expected.
Data from the Institute of International Finance confirmed investor appetite for riskier assets, showing that emerging markets had recorded a fifth straight month of net "non-resident" portfolio inflows in April, their best run since the first half of 2015.
Inflows topped $20 billion (R267 billion) for the third month running in April, making it the strongest three-month streak since 2014, helped by record dollar-denominated emerging market debt issuance.