Emerging-market equities built on their rally for a second consecutive session, positioning the main benchmark for its first weekly advance in several weeks. The gains reflect sustained investor appetite for risk assets amid improving sentiment across global markets.

Investors are channeling money into what market participants call the AI trade, a theme that has become a dominant driver of equity flows this year. Artificial intelligence-related stocks and sectors have attracted significant capital as traders position for continued growth in the technology segment.

Easing tensions in the Middle East have removed a key headwind for emerging-market assets, which typically suffer during periods of geopolitical uncertainty. The reduced risk premium has encouraged investors to increase exposure to higher-yielding EM securities.

The combination of these factors suggests that emerging markets may finally be breaking a period of underperformance relative to developed-market peers, though sustained gains will likely depend on continued stability in both geopolitical and technology sectors.