Asian currencies largely range-bound

BENGALURU: South Korean and Taiwan’s equity markets led the declines in Asia on Wednesday, as an overnight rout in Wall Street tech stocks spilled over to counterparts in the region, alongside rising investor concerns over a global economic slowdown.

Asian stock markets were broadly under pressure, with MSCI’s gauge of emerging market equities outside of Japan slumping around 1.9% to hit the lowest since early August, during an unwind of the yen carry trade.

The index has an aggregate 29% exposure to South Korea and Taiwan, with Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chipmaker, making up around 9%.

Taiwanese stocks fell 4.5% while equities in Seoul declined 3%, both hitting their lowest levels in nearly a month.

TSMC dropped as much as 5.5% while South Korea’s SK Hynix was down 9.2% at one point of the trade.

The losses came after global AI darling Nvidia was sold heavily overnight as investors reined in their optimism about the artificial intelligence sector and US economic growth.

“The harsh sell-off on Wall Street was a stark reminder that September has a bad rep (reputation) for wavering risk appetite,” Vishnu Varathan, head of macro research, Asia ex-Japan at Mizuho Bank, said in a note.

Elsewhere in Asia, stocks in Malaysia, the Philippines, and Thailand slipped between 0.1% and 0.5%, with shares in Singapore declining up to 2% after advancing for four days.

Currencies were largely range-bound in the region, with the ringgit appreciating 0.4% against the dollar, while the South Korean won and the Indonesian rupiah adding around 0.2% and 0.3%, respectively.

The Taiwan dollar lost up to 0.4% in its fourth session of losses, and was trading at its lowest levels since Aug. 19.

Analysts also pointed to a slew of factors including tepid US manufacturing data, with traders now looking forward to a raft of US data points including job openings, jobless claims, and non-farm payrolls for clues on the quantum of the Federal Reserve rate cut expected later this month.

“These could either soothe nerves or exacerbate worries about the US economy’s health. Until we see clearer signs of economic stability, this volatility could well continue,” Shier Lee Lim, lead FX and macro strategist for APAC at FX payments firm Convera said.

Locally, traders are likely to focus at inflation data from the Philippines and Thailand, retail sales print in Singapore, and Malaysian central bank’s monetary policy decision later this week.

Bank Negara Malaysia (BNM) is expected to keep its interest rates at the current 3.00% on Thursday, and will stay there at least through the end of next year, according to a Reuters poll.