Indonesian equities rebounded on Tuesday from a six-year closing low, recovering slightly after index compiler MSCI's warnings last week rattled investors, while the Taiwan dollar slid to near its weakest level in 18 months.
Jakarta equities reacted positively to the local exchange's multiple measures to ease some of the index compiler's concerns, while traders bought certain stocks at a discount, an analyst said. The rebound comes amidst a fall in regional markets.
MSCI's gauge of emerging Asia equities fell 1.3%, dragged by a 4.2% decline in heavyweight South Korean equities.
The tech-heavy KOSPI slipped for the fourth consecutive session as investors dumped chipmakers on concerns surrounding heavy global investments in AI without clear signs of returns. Samsung Electronics fell 2.5%, while SK Hynix lost 3.8%.
The pair of bellwethers have had a rough month, tumbling about 20% and 30%, respectively, while their combined weight has shrunk to less than half on the benchmark index.
All eyes are glued to the earnings reports from Meta and Tesla this week, two AI majors whose numbers could steer the South Korean market.
Thailand shares dipped 0.7%, while the banking sector led the Singapore market 0.3% down. Oversea-Chinese Banking Corp fell 0.7% and United Overseas Bank dropped 0.8%.
In Taipei, shares shed 0.6% with a 0.8% drop in TSMC. Taiwan dollar weakened to 32.616 per dollar. The currency has lost more than 1.5% in the last four sessions.
"For TWD, the pressure is coming more from capital outflows than from the US dollar itself," said Dilin Wu, research strategist at Pepperstone.
"Foreign equity selling creates demand for US dollars, putting the Taiwan dollar under pressure. In other words, even a steady US dollar won’t offer much relief if foreign investors keep pulling money out of Taiwan."
Foreign investors have pulled money out of Taiwanese equities at a record pace this year, and with oil prices shooting up, the Taiwan dollar is feeling the squeeze and sinking further.
INDONESIAN TRADERS HUNT BARGAINS
Indonesian equities rose as much as 3.8% during the day, erasing some of the nearly 15% loss incurred over the previous two sessions after MSCI's warning last week.
The exchange on Monday moved to exclude stocks with highly concentrated shareholding from its benchmark index and halve the daily down limit on stock prices.
"Some bargain hunting is likely after the sharp selloff over the past two sessions," said Lukman Leong, chief analyst at brokerage Doo Financial Futures, adding that the market may also be reacting positively to efforts to address MSCI's concerns.
"I would view this as a short-term improvement in sentiment rather than a sign that the outlook has fundamentally improved."
The rupiah appreciated marginally to 17,995 a dollar, snapping a four-day losing streak. Bank Indonesia is narrowly expected to hold interest rates on Wednesday despite market selloff, according to a Reuters poll.
HIGHLIGHTS:
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** Yuan hits fresh high since 2022 on export growth, stronger guidance
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