BENGALURU: Stocks in emerging Asia tumbled on Monday, as fresh US-China trade tensions paused an AI-fuelled rally that had sent markets to multi-year highs last week.
MSCI’s gauge of Asian emerging market equities, which had been hovering around a more than four-year high since the start of October, fell 1.5 percent.
US President Donald Trump on Friday announced additional 100 percent levies on China’s US-bound exports, effective November 1, in a reprisal against Beijing curbing its critical mineral exports.
Beijing on Sunday defended its curbs on exports of rare earth elements and equipment, but stopped short of imposing new levies on US products.
“U.S-China tensions flaring up again comes as a negative surprise for stocks, especially against the background of stretched equity valuations and positioning,” Nomura equity strategist Chetan Seth said in a note.
Some of the concerns, however, eased after Trump said: “Don’t worry about China, it will all be fine!”
Shanghai stocks dropped as much as 2.5 percent on Monday, before recouping most of those losses to trade down 0.2 percent.
Taiwan shares, which had reached an all-time high on Friday, fell 1.4 percent. South Korea’s KOSPI declined 1.6 percent.
Singapore equities slipped up to 1.5 percent, heading for a fourth consecutive day of losses.
Seth said it would be critical to see how US stocks and bonds react as Trump has shown tendencies to defuse tensions in the past, particularly when US assets suffer significantly.
Wall Street slumped on Friday but was making a comeback with S&P 500 and Nasdaq futures rising more than 1 percent each on Monday.
Regional currencies were subdued, with the Taiwan dollar down 0.5 percent. South Korea’s won trimmed losses after falling as much as 0.5 percent. The country’s foreign exchange authorities said they were closely monitoring the possibility of herd-like market behaviour amid increasing volatility in the won.
The Singapore dollar edged down 0.1 percent, ahead of the central bank’s policy decision on Tuesday. Ten of the 14 analysts polled by Reuters expect the Monetary Authority of Singapore to leave policy settings unchanged, as the city-state’s growth outlook remains resilient despite a slowdown in trade due to US tariffs.
The Malaysian ringgit was largely flat. Prime Minister Anwar Ibrahim announced a record 470 billion ringgit (USD111.40 billion) budget for 2026 on Friday, which includes investments from some state-linked companies.