BENGALURU (Aug 3): Emerging Asian stock markets retreated on Monday, driven by a downturn in South Korea after last week’s short-lived rally dissipated, while weakness in the dollar helped regional currencies appreciate modestly.
MSCI’s EM Asia equities gauge fell 1.3%, after posting its largest one-day surge in more than 17 years on Friday.
South Korea’s Kospi closed down 5.1% after a historic 17.9% climb on Friday.
Investors have been caught in a tug-of-war between blockbuster US tech earnings and rising fears that massive AI spending will delay quick returns on their investments.
Taiwan’s benchmark index, another market dominated by artificial intelligence, finished up 0.6% despite a 2.3% fall in major semiconductor player TSMC.
“Taiwan’s resilience suggests investors are treating the sell-off as a Korea-specific deleveraging event rather than a broader risk-off signal… today’s weakness in TSMC may reflect some rotation within the Taiwan market after its relative outperformance in July,” said Song Zhe, senior investment specialist, Asia ex-Japan and Emerging Market equities & Greater China equities at BNP Paribas.
Singapore stocks slipped 0.5%, moving further away from the record high of 5,713.19 touched last week.
Elsewhere, stocks in Manila rose as much as 1.7%, helped by a more than 4% rise in heavyweight International Container Terminal Services after it posted a 25% increase in annual recurring net income.
The Philippine peso appreciated to a more than one-month high of 60.90 per dollar as oil prices slumped after US President Donald Trump held off on a fresh attack on Iran to make way for a quick deal that could reopen the Strait of Hormuz.
Currencies of other energy-importing nations followed suit, with the Indian rupee appreciating to a near one-month high and the Thai baht edging 0.2% higher.
The South Korean won rose as high as 1,425 per US dollar, extending last week’s 1.6% gain. Reuters reported that both Seoul and Tokyo had stepped in on Thursday to buy their currencies in a rare intervention that marked an escalation in efforts to stem weakness.
The Japanese yen rose 1% in Asian trade to a high of 155.20 per dollar, keeping traders on alert for further intervention.
“While the yen’s appreciation helps by reducing competitive devaluation and signaling regional coordination, KRW strength is driven by structural flows… additionally, coordinated FX interventions by Japan and Korea have capped USD strength,” said Wei Li, head of multi-asset investments at BNP Paribas.
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