BENGALURU: Most emerging Asia stock markets tumbled on Monday, led by Taiwan, Malaysia and South Korea, as underwhelming economic data from China and a downgrade of United States’ credit rating dented sentiment.
In Southeast Asia, stocks in Kuala Lumpur fell 1.1% after a mixed bag of economic data from Asia’s largest economy, China, pressurised risk appetite.
China has been Malaysia’s biggest trade and investment partner for nearly two decades.
Trade-reliant South Korea’s benchmark KOSPI fell as much as 1.3%. The country’s financial authorities said they were watching domestic and international markets closely, warning that the US downgrade could exacerbate market volatility.
Moody’s downgraded the credit rating of the United States on Friday by a notch, citing ballooning debt and interest that it deemed higher than similarly rated sovereigns.
“The downgrade gave investors an excuse to book profit from the stock market near its previous peak,” said Huh Jae-hwan, an analyst at Eugene Investment Securities, referring to the benchmark index in Seoul.
The won was 0.9% higher against the dollar, which dropped 0.4%.
Taiwan also came under pressure, with its shares falling 1.5%. Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, fell 1.4%, reflecting broader concerns over the prospects of the global technology sector.
Taiwan, a key player in the global semiconductor supply chain, has been increasingly seen by Washington as crucial in its efforts to shift global supply chains away from China, especially for technology and chip companies.
The strategic importance of Taiwanese chip firms was underscored during the pandemic, when supply constraints disrupted the global electronics industry.
Other equity markets in Asia were downbeat, with shares in Thailand, Philippines and Singapore lower by 0.6%, 0.2% and 0.5%, respectively.
Currencies were mixed against a softer US dollar.
The Thai baht led gains among its regional peers, adding 0.6% after first quarter economic growth beat market expectations.
Elsewhere, the Malaysian ringgit extended losses after the domestic central bank trimmed annual economic growth forecasts. The currency was last trading unchanged.
The Indonesian rupiah was steady ahead of a Bank Indonesia meeting later in the week, prefaced by growing expectations of a rate cut.
“While a rate cut could support equities, it may cap any near-term strength in the currency, especially with US yields still elevated and the Federal Reserve in no rush to ease,” said Mohit Mirpuri, an equity fund manager with SGMC Capital.
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