EMERGING MARKETS-EM stocks gain on tech boost; FX slips ahead of Fed verdict

By Sudeshna Ghoshal

Oct 28 (Reuters) - An index tracking emerging market stocks hit a one-week high on Wednesday on the back of a tech boost after South Korea's SK Hynix posted a record profit, while currencies dipped ahead of the US Federal Reserve's interest rate decision.

MSCI's global EM equity index .MSCIEF gained 2% after South Korea's tech-heavy KOSPI .KS11 jumped the most in three months.

"Fears of an AI bust have receded slightly, and the story has been helped by impressive results from SK Hynix. This has allowed the market to focus on the core story of resilient growth, high inflation and the prospect of higher energy prices - all dollar-positive," said Chris Turner, global head of markets research at ING.

Memory chipmaker SK Hynix 000660.KS surged over 10% after it said it would return about $75 billion to shareholders this year, after reporting a more than seven-fold jump in quarterly profit.

Peer Samsung 005930.KS also jumped 9%, while tech-heavy Taiwanese stocks .TWII gained 2%.

Results from Big Tech firms in the US are due this week, which would also influence sentiment towards AI.

In emerging Europe, Polish equities .WIG20 were muted, while Romanian stocks .BETI were up 0.6%. Hungarian stocks .BUX lost 0.3% on the day.

Hungarian Finance Minister Andras Karman is set to submit the 2027 budget bill to parliament on Friday, which targets a deficit of 4.9% of output, much lower than this year's 7.5% deficit inherited from former prime minister Viktor Orban.

The planned cut in the deficit, investors said, was a positive first step in Hungary's efforts to adopt the euro.

Markets in Turkey and the Czech Republic were closed for public holidays.

South Africa's stocks .JTOPI and rand were little changed.

Meanwhile in Israel, local stocks .TA125 lost 3.3% while the shekel weakened 1.3% against the dollar after initial results from Tuesday's general election pointed to a political deadlock.

The news comes after historic election results in Serbia and Brazil over the weekend. Serbia's Aleksandar Vucic conceded defeat to a student-led protest movement, while Brazilian President Luiz Inacio Lula da Silva was re-elected, defying predictions and anti-incumbent sentiment.

On the FX front, investors are closely watching for the Fed's decision, where the central bank is widely expected to leave rates unchanged.

"Most central FOMC members have signalled that they can wait until December before hiking again, although a few see more urgency," said Danske Bank analysts in a note.

"We still see a need for further tightening and expect two more hikes, in December and March."

Oil prices rose by more than $2 on Wednesday after an attack on a refinery in Saudi Arabia. O/R

Higher energy costs have reinforced expectations that central banks may need to keep monetary policy restrictive for longer. A global rout in bond markets in recent months has also tightened financial conditions through higher yields.

High inflation will persist in the global economy well into next year, a Reuters poll showed on Tuesday.

Thailand's central bank kept its key interest rate unchanged for a fourth straight meeting on Wednesday, while Taiwan said it will raise interest rates if the consumer price index next year exceeds 2% by a large margin.

HIGHLIGHTS:

** High inflation to persist globally into next year, Reuters poll shows

** Thai central bank keeps interest rate unchanged, as expected

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