Emerging Asian Equities Slide to Three-Week Low
Emerging Asian equities have fallen to a three-week low, with technology-heavy markets in South Korea and Taiwan experiencing a significant decline. This downturn is attributed to investors paring risk ahead of policy decisions, US economic data, and year-end holidays.
Market Performance
An MSCI index of emerging Asian equities fell 1.6% to its lowest level since November 25, with most regional markets trading in narrow ranges. Equity benchmarks in South Korea and Taiwan shed around 2.3% and 1.8%, respectively, amid growing unease over the longer-term prospects of AI-related companies. The two tech-heavy East Asian countries make up more than a third of the broader MSCI index.
South Korea and Taiwan
Shares of Korean chipmakers Samsung Electronics and SK Hynix fell 2% and 4.3%, respectively, while battery maker LG Energy Solution slid 6.4%. Taiwan stocks fell to their lowest level since December 1, weighed down by contract chipmaker TSMC, which shed 1.7%. The decline in these markets is a significant factor in the overall downturn of emerging Asian equities.
Southeast Asian Markets
In Southeast Asia, Singapore’s Straits Times Index briefly crossed the crucial 4,600 mark for the first time but reversed course to trade 0.2% lower by afternoon. Meanwhile, Vietnam stocks recouped earlier losses to rise 2.6% in the session, while Malaysian equities added 0.2%. Indonesia’s benchmark gauge edged lower but remained around 133 points below its lifetime high of 8,776.970 points.
Monetary Policy Meetings
Market focus is on the final monetary policy meetings of the year in Taiwan, Indonesia, and Thailand, with economists forecasting no change in rates for Indonesia and Taiwan, but a 25-basis-point cut from the Bank of Thailand to support growth. Bank Indonesia is expected to keep interest rates unchanged, a move that should limit any significant market impact.
Currency Performance
Currencies were largely on the back foot against the greenback, with Taiwan’s dollar, South Korea’s won, and Indonesian rupiah weakening up to 0.4%. Malaysia’s ringgit inched 0.2% higher to its strongest point since early March 2021. Thailand’s central bank has taken steps to address the baht’s appreciation, with the currency down 0.2% on the day.
Conclusion
In conclusion, emerging Asian equities have slid to a three-week low due to a decline in technology-heavy markets in South Korea and Taiwan. The market is awaiting the outcome of monetary policy meetings in Taiwan, Indonesia, and Thailand, which is expected to have a significant impact on the market. The currency performance has also been affected, with most currencies weakening against the greenback. As the year comes to a close, investors will be closely watching the market for any signs of recovery or further decline.
