BENGALURU (July 21): Taiwanese and South Korean benchmarks snapped a days-long losing streak, while Thai shares hit a more-than-three-year high, as softer oil prices steadied sentiment ahead of key chip and artificial intelligence (AI)-linked earnings.
The MSCI EM Asia equities index rose nearly 3%, driven by gains in tech-heavy South Korea and Taiwan, which constitute about 60% of the index.
The MSCI index has been swinging in recent days, tracking volatility in AI-linked stocks and the pressure on the region's import-oil-dependent economies from a rise in crude prices following fresh strikes between the US and Iran.
Seoul's benchmark Kospi closed up 3.6%, snapping a two-session loss after having been closed on Friday for a local holiday. Meanwhile, shares in Taipei closed up 4.2%, the first rise in three sessions.
SK Hynix, the world's leading AI memory chipmaker, closed up 4.1%, while rival Samsung Electronics added 6.2%.
"Every name in the AI space is now being priced for near perfection, as if the current pace of growth is guaranteed to continue indefinitely," said Zavier Wong, a market analyst at eToro, adding that even a hint of a temporary ceiling gets treated as bad news.
"Money has been piling into a very narrow set of memory and foundry names for months, and some of that is rotating out into whatever looks less stretched."
Bangkok equities climbed as much as 0.7%, hitting their highest level since Feb 23, 2023 and logging a fifth consecutive session of gains, led by a 1.7% jump in Delta Electronics.
Recent baht weakness could further support foreign interest in Thai equities, particularly if investors see limited additional currency downside as Middle East tensions ease, said Poon Panichpibool, a market strategist at Krung Thai Bank, while adding that he still sees limited upside for the SET index.
The rotation out of crowded AI trades has opened a window for Indonesia, a laggard in the region, where beaten-down valuations are drawing fresh interest even as investors remain wary ahead of MSCI's November index review.
Jakarta shares climbed as much as 1.5%, extending gains to a ninth straight session, while the rupiah firmed to 17,870 per dollar after weakening towards 18,000 earlier this week.
The currency remains vulnerable to fresh external shocks, including any escalation in Middle East tensions.
"The shift in external conditions has arguably strengthened the case for a precautionary policy hike to anchor investor confidence," DBS analysts wrote.
Elsewhere, Manila stocks rose as much as 1.1%, while Singapore added around 0.6%.
Currencies across emerging Asia were mostly tepid, with Taiwan's dollar weakening to as much as 32.431 per dollar in the session. South Korea's won strengthened to 1,471.1 per dollar.
Uploaded by Chng Shear Lane