Asian stock markets fall for the third day running: South Korea and Taiwan under pressure amid AI concerns

On Thursday, shares on Asian emerging markets continued to fall, dragged down by South Korean and Taiwanese technology stocks, due to persistent concerns about the artificial intelligence sector, whilst most regional currencies held their ground thanks to the stability of the dollar.

The MSCI index of Asian emerging market equities fell by 0.1%, whilst the EM Asia IT index dropped by 0.3%. Both indices are heavily influenced by South Korea’s KOSPI and Taiwan’s benchmark index; the former fell by almost 2%, whilst the latter recovered from initial losses, rising by around 0.5%. Asian chipmakers have dominated the headlines this week, with investors concerned about heavy spending on artificial intelligence and the potential competitive threat posed by China. The technology indices in Seoul and Taipei are set to close July down 33.2 per cent and 12.3 per cent respectively, with the KOSPI on course to record its worst month ever. “We are seeing signs of capitulation in some of the most heavily traded AI-related positions, where expectations and positioning had been pushed to the limit, but for now the sell-off remains largely concentrated on AI hardware rather than being widespread across Asian equities,” said Gary Tan, portfolio manager at Allspring Global Investments.

South Korea’s SK Hynix saw its losses widen, slipping by 1.5 per cent after missing earnings forecasts on Wednesday, whilst Samsung Electronics rose as much as 8.4% before paring its gains to 0.8% after the world’s leading memory chip manufacturer remained optimistic about demand for AI-related chips and said supply shortages could worsen next year. Semiconductor giant TSMC rose by as much as 2.7%. Indonesian shares gained as much as 1.3 per cent, regaining stability following the surprise resignation of central bank governor Perry Warjiyo earlier this week, which reignited fears over the institution’s independence. The Jakarta Composite Index is on track to close the week down 0.7%. The Indonesian rupiah fell slightly, settling at 18,065 to the dollar. The currency is set to record a fall of more than 1% in July, its fifth consecutive monthly loss.

Elsewhere in South-East Asia, shares in Singapore fell by as much as 1.3%, recording their biggest daily loss in the last seven weeks, after hitting an all-time high of 5,713.19 points the previous day. Thai shares opened 1.8 per cent lower, at their lowest level in nearly a month, following a long bank holiday. Most regional currencies remained unchanged against the dollar, which was stable, after the Federal Reserve kept its benchmark interest rate unchanged. The Taiwanese dollar bucked the trend, weakening by 0.3%, whilst the South Korean won appreciated by 0.7%.