(Sept 16): Chip-heavy South Korean and Taiwanese benchmarks lifted emerging Asia stocks on Wednesday, while regional currencies were muted with the US dollar near multi-week peaks ahead of a widely expected Federal Reserve rate hike.

Regional markets found some respite from the recent global bond selloff, while investors continued to favour the tech-heavy indexes despite recent debate around risks surrounding AI.

The MSCI emerging market Asia equities index gained as much as 0.9%.

South Korea and Taiwan, which dominate the MSCI gauge, ended 1.4% and 0.7% higher, snapping a four-day losing streak.

Kospi gained on the back of resilient AI-memory demand, a weaker won that supported exporters' earnings, as well as bargain-hunting in Samsung Electronics and SK Hynix after the recent sell-off.

Elsewhere in Indonesia, stocks rose as much as 1.2% after losing 3% over five days, supporting the MSCI gauge.

"For (Indonesian) equities, today's move should initially be interpreted as a rebound after a fairly significant correction, rather than evidence that the global headwinds have disappeared," said Fakhrul Fulvian, chief economist at Trimegah Sekuritas Indonesia.

Markets digested the Monday appointment of Suahasil Nazara as finance minister of Southeast Asia's largest economy. The government's move was seen as an attempt to restore trust in the country's fiscal policies that have suffered from concerns over fiscal discipline.

Oil prices fell 93 cents but remained above US$100 a barrel, keeping pressure on importer countries such as the Philippines and Thailand, after an unexpected build in US crude inventories despite continued supply concerns in Saudi Arabia.

Equities in the Philippines fell as much as 2% to their lowest level since June 11.

Thailand equities were down 0.5%, on track for their sixth consecutive session of losses.

Meanwhile, the South Korean won weakened by as much as 0.8% to 1,372.80 per dollar, limiting gains on the MSCI's gauge of EM currencies that edged higher. 

The baht, the Singapore dollar and the rupiah edged lower, while the peso slightly strengthened to 62.663 a dollar.

The dollar index hovered near its two-week high at 99.59, with markets largely pricing in a 25-basis-point Fed rate hike on the day.

Markets expect a total of over 90 bps hikes through to September 2027, said Christopher Wong, FX strategist, OCBC.

"If these hawkish expectations are partially unwound post-FOMC, then it can be supportive for Asia ex-Japan currencies."

Markets will parse through the FOMC statement and Fed chair Kevin Warsh's press conference for clues on whether the central bank will treat any rate hike as sufficient or signal further tightening ahead.

Uploaded by Magessan Varatharaja