Most Asian equities declined on Friday, with markets in Taiwan and South Korea slipping again after a rebound the previous day, as concerns mounted over the AI-driven rally in tech stocks and their stretched valuations.
The MSCI index of emerging Asia equities and a broader index tracking Asian equities outside Japan fell about 1% each, and were on course for their worst week since early August.
Markets swung sharply this week as mixed signals from U.S. Federal Reserve officials left investors guessing about its policy outlook and fresh worries over tech valuations and warnings from Wall Street triggered a shake-up in AI-heavy equity markets.
Those concerns raised questions whether the rally built on hopes of imminent Fed easing and AI-fuelled growth may have run ahead of itself, and whether the tech industry's vast spending will ultimately justify the hype.
Markets are cautious after the U.S. tech pullback driven by the OpenAI-linked selloff and renewed uncertainty around AI valuations, with mixed U.S. labour data and hawkish Fed comments adding to the unease, said Billy Leung, investment strategist at Global X ETFs Australia.
South Korea's KOSPI stock index, a poster child for the AI boom and one of the top performers this year, fell 3% on Friday and was on track for a 5% weekly drop - its biggest since mid-November 2024.
Taiwan stocks fell 1% for the day, extending weekly losses to 1.6% and snapping a 10-week winning streak. The gauge had surged 9.3% in October, driven by an AI-fuelled rush into tech equities.
The White House told federal agencies it would not permit Nvidia to export its latest scaled-down AI chips to China, reports said, prompting profit-taking in tech stocks.
Indonesian stocks rose 0.4% to a fresh high. The benchmark stock index has fared better than its peers throughout the week and has gained 2.4% so far.
Singapore's benchmark jumped as much as 0.8% to a new high and was last up 0.1%, extending its winning streak.
"Given the STI Index is more exposed to sectors like financials and telecommunications, the Singaporean market was generally less exposed to the risk-off tone felt overnight," said Hugh Lam, investment strategist at Betashares.
Meanwhile, emerging Asian currencies were largely mixed against a weaker dollar index. The Korean won lost 0.6%, hitting its weakest since April 11.
The Malaysian ringgit rose 0.3% to its highest in 13 months, a day after its central bank kept the benchmark interest rate unchanged.
HIGHLIGHTS:
** Philippine growth slows sharply in Q3 as 'shocking' corruption scandal dents confidence
** Bank Indonesia says to issue BI-floating rate notes on November 17 - Reuters
