Asian stocks: South Korean, Taiwanese equities drift lower

SINGAPORE: South Korean and Taiwanese equities led losses in emerging Asia stock markets on Thursday, tracking an overnight tech sell-off on Wall Street as investors weighed the possible implications of rapid AI expansion on the broader technology sector.

The MSCI gauge of emerging Asian equities slipped more than 2percent, dragged lower by a 4percent plunge in South Korea’s KOSPI index and a 1.5percent decline in Taiwan’s benchmark equities gauge.

Together, the two tech-heavy benchmarks make up around 40percent of the MSCI index, and continue to hover near their lifetime peaks.

Shares of top contract chipmaker TSMC dropped 0.8percent, while Samsung Electronics and SK Hynix fell between 5percent and 6percent, dragging the regional IT stocks gauge down more than 3percent.

Investors have been exiting technology stocks on worries massive AI outlays could disrupt the technology services sectors. The latest selloff, which wiped out about USD830 billion globally, was triggered by a new legal tool from Anthropic’s Claude large language model.

“While the Asia tech complex remains more insulated from this selloff, given many are further up the AI supply chain, investors are looking elsewhere to park capital as the longer term viability of traditional SaaS (software-as-a-service) business models remains in question,” said Hugh Lam, investment strategist at Betashares.

Song Zhe, senior investment specialist at Asia and Global EM Equities with BNP Paribas, said, “the latest AI wobble looks like classic de-risking in crowded trade YTD, rather than a clean break in AI buildout.”

“Near term, expect a choppy tape and sharper differentiation by order visibility rather than a one-way move.” In Southeast Asia, stocks in Thailand, Singapore and Malaysia slipped. Indonesia’s Jakarta Composite Index, the worst-performing index in the region so far this year, inched higher for a third straight session, after plunging 17percent late last month following MSCI’s warnings over transparency concerns.

Among currencies, the Thai Baht depreciated to 31.90 per US dollar, its weakest since December 9. The country’s commerce ministry reported a bigger-than-expected decline in headline inflation for January.

In the Philippines, annual inflation accelerated to 2.0percent in January, the fastest pace in 11 months, but remained within the central bank’s 2percent to 4percent target for the year.

The peso appreciated 0.2percent to 58.972 against the US dollar.

Elsewhere, the ringgit slipped 0.4percent, while the Singapore dollar dropped 0.1percent.