BENGALURU: Emerging Asian equities rose on Monday, driven by AI-led gains in South Korea, Taiwan and Singapore, with traders assessing the implications of a criminal probe into US Federal Reserve Chair Jerome Powell on the US dollar and monetary policy.
The MSCI index of emerging Asia equities and its broadest index of Asia-Pacific shares excluding Japan both advanced 0.6 percent, while its broader index of global EM equities rose 0.5 percent.
The US dollar index tumbled by the most in three weeks against a basket of major currencies, after US prosecutors opened a criminal investigation into Powell, triggering concerns over the Fed’s independence.
“A loss of Fed policy independence is still seen as a risk rather than a base case and as such, the USD pullback is not likely to sustain for now,” said Fiona Lim, a senior forex strategist at Maybank.
Swaps now indicate a 95 percent probability for the Fed to hold rates this month, while chances of a 25-basis-point cut in March have dropped to around 26.5 percent.
“Markets still have quite a bit of faith in the Fed’s ability to ensure monetary policy independence, but we cannot rule out the possibility that the next chair could be more dovish and a loyalist to Trump,” Lim said.
In East Asia, equities in Taipei climbed as much as 1.3 percent, hitting a record peak just shy of the 30,700 level, while those in Seoul gained up to 1.4 percent to notch an all-time high as well.
Taiwanese and South Korean equities were among the biggest winners from the artificial intelligence trade in 2025 and have continued to gain in 2026, staying in favour as investors keep riding the AI optimism.
Both benchmark indexes have begun 2026 on a high note, with South Korean equities gaining nearly 10 percent in just seven sessions.
In Southeast Asia, stocks in Singapore also hit a record high, advancing as much as 0.7 percent, while Philippine shares rose as much as 1.2 percent to their highest since July 25.
Currencies in emerging Asia were a mixed bag even though the dollar slipped. The Indonesian rupiah declined around 0.2 percent, while Taiwan’s dollar edged lower. The South Korean won slipped as much as 0.7 percent to its lowest since December 24, 2025, extending losses to a ninth session.
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