Emerging Markets: AI-linked stocks slide in EM Asia as early US election results favour Democrats
EMERGING MARKETS-AI-linked stocks slide in EM Asia as early US election results favour Democrats Repeats with no changes to text
By Roshan Thomas
Nov 4 (Reuters) - South Korean and Taiwanese stocks tumbled on Wednesday as early US midterm election results pointed to strong Democratic gains, stoking worries that stricter oversight of data-centre projects could weigh on AI investment.
Tech-heavy benchmarks bore the brunt of the selling, with South Korea's KOSPI .KS11 falling 4%, while Taiwan's benchmark index .TWII lost 3.3%, hitting its lowest level since late July.
The weakness also dragged MSCI's emerging markets index .MSCIEF down 1.8% to levels not seen since early April.
The US midterm election outcome could help to shape several key market themes, from the pace of AI data-centre expansion and the fiscal outlook to defence spending and regulatory oversight of sectors like healthcare, banking and cryptocurrencies.
Growing public opposition to data-centre projects and efforts by some Democratic candidates to curb their expansion over concerns about electricity costs and environmental impact lend credence to those fears, said Inki Cho, senior financial market strategist at Exness, an online trading platform.
South Korean chipmakers SK Hynix 000660.KS and Samsung Electronics 005930.KS fell 6.1% and 4.1%, respectively, while Taiwan's TSMC 2330.TW was down 2.2%.
Meanwhile, emerging Asian currencies broadly strengthened as the dollar fell sharply, led by a 0.5% gain in the South Korean won KRW=, while the Malaysian ringgit MYR= and the Philippine peso PHP= each inched about 0.1% higher.
In Singapore, the dollar SGD= added 0.2%, while stocks .STI fell 1.4%, extending a losing streak to a fifth consecutive session.
United Overseas Bank UOBH.SI reported quarterly profit that missed analysts' expectations; its shares fell 6.5%.
Other banking heavyweights also declined, with DBS Group DBSM.SI and Oversea-Chinese Banking Corp OCBC.SI down 1.8% and 2.5%, respectively. Investors looked ahead to DBS' third-quarter earnings, which are due on Thursday, and OCBC's results on Friday.
"Singapore bank stocks are increasingly vulnerable to profit-taking as investor expectations remain elevated," said James Ooi, chief market strategist at Tiger Brokers.
"The key concern is whether Singapore banks can sustain profitability and returns on equity amid narrowing interest margins and moderating fee income."
In Indonesia, the rupiah IDR= was flat while stocks .JKSE pared some of their earlier losses but were still down 0.6%, as investors assessed the financial regulator's newly announced sanctions for stock market violations.
The regulator said the measures included the closure of more than a dozen securities accounts linked to market misconduct.
Investor sentiment has been fragile since MSCI warned that Indonesia could be removed from a suite of widely tracked indexes, prompting authorities to roll out support measures following the market's worst two-day selloff on record.
"Despite undemanding valuations, investor focus is shifting to policy execution, market reforms and stronger enforcement," said Ari Jahja, head of Indonesia research at Macquarie Capital.
Elsewhere, Thai stocks .SETI fell more than 1.1%, sending the benchmark to its lowest level since late April, while the baht THB=TH edged higher against the dollar.
Separately, the country's finance minister said Thailand had no plans to raise the country's public debt ceiling.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields at 7.707%
** Democrats close in on US House, make gains in Senate
** China's yuan hits 2-week low as investors weigh PBOC foreign exchange reserve hike
Asia stock indexes and currencies at 0354 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.65 | -0.62 | .N225 | -4.41 | 19.79 |
China | CNY=CFXS | -0.17 | +4.56 | .SSEC | -0.10 | -9.18 |
India | INR=IN | +0.22 | -4.93 | .NSEI | -0.29 | -9.14 |
Indonesia | IDR= | +0.03 | -8.05 | .JKSE | -0.64 | -43.65 |
Malaysia | MYR= | +0.12 | -0.34 | .KLSE | -0.20 | -3.66 |
Philippines | PHP= | +0.07 | -7.26 | .PSI | 0.93 | -6.22 |
S.Korea | KRW= | +0.53 | +7.63 | .KS11 | -3.87 | 28.85 |
Singapore | SGD= | +0.15 | +0.48 | .STI | -1.42 | 11.81 |
Taiwan | TWD=TP | -0.41 | -4.43 | .TWII | -3.31 | 44.57 |
Thailand | THB=TH | +0.13 | -6.75 | .SETI | -1.14 | 17.01 |
(Reporting by Roshan Thomas in Bengaluru; Editing by Thomas Derpinghaus)
((Roshan.Thomas@thomsonreuters.com))
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