SOUTH-EAST ASIA (Reuters): Emerging Asia stocks kicked off 2026 on a firm footing on Friday with markets in Taiwan, South Korea, and Singapore scaling new record peaks as investors gauge whether last year’s AI-driven rally still has more room to run.
The MSCI index of emerging Asian equities jumped as much as 2% to its highest point since late October, driven by stocks in South Korea and Taiwan, which make up two-fifths of the gauge.
A broader index of global EM equities also jumped 1.6% to its highest since late February 2021. The AI-driven rally dominated 2025, propelling equity markets across Asia to historic highs despite lingering valuation concerns, with the Taiwanese and South Korean markets among the biggest beneficiaries.
South Korea's KOSPI index, last year's top performer with a 75% gain, rose 2.3% to a record 4,313.55, driven by Samsung Electronics and SK Hynix, which climbed 5% and 3.5%, respectively. Taiwan's benchmark index touched a fresh peak of 29,363.43 points.
The index crossed the 29,000-point mark for the first time on December 31, ending the year with a 27% gain, driven by technology and AI-related shares.
"South Korean and Taiwanese equities remain supported by strong AI-driven export demand and solid semiconductor earnings, but upside from here is likely to moderate," said Glenn Yin, the director of research at AC Capital Market.
"Valuations are stretched after last year's sharp rally, making a repeat in 2026 less likely. While structural demand for advanced chips remains intact, performance is likely to be more selective and less explosive."
Singapore's FTSE Straits Times index jumped as much as 0.5% to a record high of 4,669.290 points. The index gained over 22% in 2025, driven by strong gains in heavyweight banks, telecoms, industrials and real estate firms.
Stocks in the Philippines followed suit, rising 1% to their highest since October 21, while those in Malaysia dipped to a six-session low. Currencies started the year on the back foot: The Indonesian rupiah depreciated 0.3% against the US. dollar, while the Korean won slipped 0.4%.
The won had a strong finish to 2025, appreciating just over 3% during the last week of December.
The Bank of Korea's chief said the won's recent high-1,400 range against the dollar is well above economic fundamentals, partly driven by local investment in overseas stocks. The rest of the local currencies traded largely flat.
On the data front, Singapore's economy grew 5.7% in the fourth quarter, lifting full-year growth to 4.8%, the strongest since 2021, driven by robust manufacturing and a global surge in AI-related products.
"The robust growth momentum looks poised to carry forward into the first half of 2026, overshadowing tariff and geopolitical shocks," Maybank analysts said in a note.
"The AI boom is expected to continue...supporting Singapore's electronics exports, investments and tech services activity." Most Asian currencies had a solid run in 2025, backed by strong fundamentals and a softer dollar.
The Malaysian ringgit gained over 10% while the Thai baht notched an 8.4% rise.
The dollar index slumped 9% in 2025 and logged its biggest annual drop since 2017 as interest rate cuts and erratic US. trade policy under President Donald Trump weighed on the greenback. Markets in Thailand and China were closed due to a holiday. -- Reuters
