BENGALURU: South Korean shares dragged emerging Asian stock markets lower on Monday as investors grew wary of hefty AI-related spending and weak returns ahead of the earnings season, while broad US dollar selling lifted the won to a two-year high.
MSCI’s broad index of emerging Asia stocks fell 0.8 percent to its lowest since mid-September. Tech-heavy South Korea and Taiwan markets account for more than half of the benchmark.
South Korea’s KOSPI closed down 3.7 percent after reopening from a long weekend, hitting its lowest since mid-August. Chip heavyweights Samsung Electronics and SK Hynix slipped 4.4 percent and 4.5 percent, respectively, hitting multi-week lows.
In Taiwan, the benchmark declined as much as 1.1 percent before recovering to end flat as trade resumed after a holiday. TSMC fell 1.6 percent in its steepest daily loss since mid-September, ahead of earnings later this week that are expected to show record quarterly profit.
Investor scrutiny has intensified over massive fundraising by technology firms to finance high-end AI chips, as high energy costs, expectations of further monetary tightening and rising sovereign debt drive borrowing costs higher.
South Korea accounted for the bulk of equity outflows from Asia excluding China last month, with foreigners selling USD17 billion worth of equities.
The KOSPI has seen five straight months of foreign outflows, likely reflecting persistent concerns about valuations and the sustainability of the semiconductor supercycle, ANZ head of Asia research Khoon Goh said in a note. In Indonesia, stocks dropped as much as 2 percent to hit their lowest since July.