BENGALURU (July 30): Emerging Asia markets fell for a third straight session on Thursday, as persistent artificial intelligence (AI) concerns battered tech-heavy markets in South Korea and Taiwan, while most regional currencies edged lower against a firm dollar.

The MSCI EM Asia stocks fell 0.3%, shedding around 6% over three sessions. The gauge has declined 11.7% so far in July, heading for its weakest monthly move since March.

The broad index attributes most of its weightage to South Korea's Kospi and Taiwan's benchmark; the former was down around 1%, while the latter surrendered earlier gains to slip 0.3%.

The AI-linked indices in Seoul and Taipei were set to finish July down 34% and 13.4%, respectively. The Kospi was on track for its weakest month on record, while the Taiwan benchmark eyed its worst monthly move since March 2020.

Volatility in the South Korean market was exacerbated by single-stock leveraged ETFs, amid concerns over AI spending and growing competition from Chinese chipmakers, prompting regulators to cap investments in these products.

"Higher-for-longer (Federal Reserve) interest rates may weigh on valuations, increase financing costs and make it more expensive to raise fresh capital, potentially slowing the pace of AI investment and weighing on broader economic growth," said James Ooi, market strategist at Tiger Brokers.

A divided Fed left its interest rate unchanged on Wednesday even as Chair Kevin Warsh pledged to bring inflation down, leaving investors uncertain about the direction of the central bank's policy path.

Indonesian stocks advanced as much as 1.3%, finding their footing after the surprise departure of the country's top banker Perry Warjiyo earlier this week renewed concerns about the central bank's independence.

Singapore stocks declined as much as 1.3%, their steepest one-day loss in seven weeks, a day after hitting an all-time high of 5,713.19.

Thailand shares were down as much as 2.3% at a near one-month low, after a long holiday.

On the currency front, the Taiwan dollar and Thai baht weakened. The South Korean won was an outlier, appreciating to its highest point since late February.

The Indonesian rupiah edged down to last trade at 18,090 per dollar, skirting near its record low of 18,190. The battered currency is on course to log a fifth month of declines with July losses of over 1%.      

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