BENGALURU (Nov 4): South Korean and Taiwanese stocks tumbled on Wednesday as early US midterm election results pointed to strong Democratic gains, stoking worries that stricter oversight of data-centre projects could weigh on artificial intelligence (AI) investment.

Tech-heavy benchmarks bore the brunt of the selling, with South Korea's Kospi falling 4%, while Taiwan's benchmark index lost 3.3%, hitting its lowest level since late July.

The weakness also dragged MSCI's emerging markets index down 1.8% to levels not seen since early April.

The US midterm election outcome could help to shape several key market themes, from the pace of AI data-centre expansion and the fiscal outlook to defence spending and regulatory oversight of sectors like healthcare, banking and cryptocurrencies.

Growing public opposition to data-centre projects and efforts by some Democratic candidates to curb their expansion over concerns about electricity costs and environmental impact lend credence to those fears, said Inki Cho, a senior financial market strategist at Exness, an online trading platform.

South Korean chipmakers SK Hynix and Samsung Electronics fell 6.1% and 4.1% respectively, while Taiwan's TSMC was down 2.2%.

Meanwhile, emerging Asian currencies broadly strengthened as the dollar fell sharply, led by a 0.5% gain in the South Korean won, while the ringgit and the Philippine peso each inched about 0.1% higher.

In Singapore, the dollar added 0.2%, while stocks fell 1.4%, extending a losing streak to a fifth consecutive session.

United Overseas Bank reported quarterly profit that missed analysts' expectations; its shares fell 6.5%.

Other banking heavyweights also declined, with DBS Group and Oversea-Chinese Banking Corp (OCBC) down 1.8% and 2.5% respectively. Investors looked ahead to DBS' third-quarter earnings, which are due on Thursday, and OCBC's results on Friday.

"Singapore bank stocks are increasingly vulnerable to profit-taking as investor expectations remain elevated," said James Ooi, the chief market strategist of Tiger Brokers.

"The key concern is whether Singapore banks can sustain profitability and returns on equity amid narrowing interest margins and moderating fee income."

In Indonesia, the rupiah was flat while stocks pared some of their earlier losses but were still down 0.6%, as investors assessed the financial regulator's newly announced sanctions for stock market violations.

The regulator said the measures included the closure of more than a dozen securities accounts linked to market misconduct.

Investor sentiment has been fragile since MSCI warned that Indonesia could be removed from a suite of widely tracked indices, prompting authorities to roll out support measures following the market's worst two-day sell-off on record.

"Despite undemanding valuations, investor focus is shifting to policy execution, market reforms and stronger enforcement," said Ari Jahja, the head of Indonesia research at Macquarie Capital.

Elsewhere, Thai stocks fell more than 1.1%, sending the benchmark to its lowest level since late April, while the baht edged higher against the dollar.

Separately, the country's finance minister said Thailand had no plans to raise the country's public debt ceiling.

Uploaded by Tham Yek Lee