South Korean equities dropped 8% on Tuesday, triggering a circuit breaker, dragged lower by a steep sell-off in Samsung Electronics sharesamid investor concerns about the durability of the AI-driven earnings boom.
The MSCI EM Asia index fell nearly 3%, marking its weakest session in nearly two weeks, as chip-heavy KOSPI index tumbled 8% to approach a one-month low. Taiwan's benchmark gauge also slipped more than 2%.
Samsung Electronics tanked 10% as investors looked beyond the South Korean electronics giant'sforecast of a 19-fold jump in second-quarter earnings, with results failing to alleviate concerns about the sustainability of the AI-driven chip boom.
"Samsung's decline suggests the AI trade is becoming increasingly valuation-sensitive," said Glenn Yin, director of research at ACCM.
The market needs evidence that AI spending and earnings growth can keep accelerating, otherwise, tech-heavy Asian markets, where performance has grown increasingly concentrated in a handful of AI-related companies, could face a rapid de-rating, Yin added.
In Southeast Asia, Thai stocks fell as much as 1.1%, as electronics manufacturer Delta Electronics Thailand declined nearly 3% to become the top laggard on the benchmark.
Singaporean stocks rose about 1% to a record high, as shares of OCBC, UOB and DBS gained 1%-2%. Stocks in Jakarta advanced 0.5% to a more than 1-week high, while the rupiah lingered around 17,980 a dollar.
In the Philippines, shares rose 0.7% after data showed annual inflation slowed in June. The central bank also said it was prepared to take further monetary action as needed. The next scheduled policy review is on August 27.
"While the June CPI print offers some reassurance that inflation has peaked, underlying price pressures remain elevated. This is likely to keep the central bank cautious for several reasons," said Deepali Bhargava, ING's Asia-Pacific regional head of research.
In Malaysia, stocks edged lower while the ringgit appreciated to 4.0720 a dollar. The currency has firmed by around 1.5% since June 24 when the central bank announced measures to support it after it had weakened more than 5% earlier that month.
Bank Negara Malaysia is expected to keep its benchmark interest rate unchanged for a sixth straight meeting at 2.75% on Thursday, a Reuters poll showed, as inflation is subdued and economic growth continues to be strong.
Elsewhere, the South Korean won appreciated 0.5% to 1,519 a dollar for the first time in nearly three weeks, while the Philippine peso was largely unchanged.
HIGHLIGHTS:
** Spread between Indonesia's 1 year and 10-year yields at 75.9 bps, around the highest since 2011
** AI investors may pivot to hyperscalers from chipmakers, Morgan Stanley says
** Indonesia forex reserves rise slightly to $145.6 billion at end-June
** India's Modi to meet Indonesia's Prabowo for talks on defence, food security
** SK Hynix to bring ADR funds to South Korea by around July 15, source says - Reuters
