Emerging Asian equities recovered some ground on Friday but remained close to a three-month low, as worries about AI’s unsustainable funding needs drove money into safe havens.
MSCI's emerging Asia equities index ticked 0.1% higher, but hovered near its weakest level since late July. It was on track for a fourth consecutive weekly loss.
South Korea's KOSPI closed 0.3% higher after falling as much as 4.1% during the session. Investors cheered SK Hynix's decision to hold off on a planned US listing for its Solidigm chip unit due to market volatility, sending the stock up 4.4%.
The initial selloff in Seoul followed a 2.6% slide in the tech-heavy Nasdaq after Meta posted its first cash outflow in more than a decade due to AI-related expenditures.
The South Korean won strengthened to 1,326.30 per dollar, hovering near a two-year high and poised for a weekly gain of 0.6%.
Asia's oil importers stayed on edge after crude prices hit a new five-month peak of $114.10 a barrel, even as investors piled into safe-haven bonds, sending the 10-year US Treasury yield down 19.3 basis points in its biggest daily drop since March 2023 and keeping it below the closely watched 5% level.
"This (trend in oil and Treasuries) may signal a shift in market concerns: from the inflationary impact of higher oil prices towards the combined threat that elevated energy costs, tighter financial conditions and deteriorating risk appetite pose to economic growth," said Dilin Wu, research strategist at Pepperstone.
"The market's focus is shifting from questioning returns on AI investment towards a broader emphasis on capital preservation."
Elsewhere in Asia, Singapore shares edged lower, while Malaysia's benchmark index slipped 0.1%.
Philippine shares extended declines with a 0.9% drop, a day after the central bank delivered an outsized rate hike to rein in sticky inflation. The peso fell to a record low of 63.523 per dollar, with a decline of about 0.7% so far this week.
"The focus of (Philippine) policy remains largely on containing inflation while growth concerns remain in the back seat," Citi analysts wrote.
Indonesian stocks rose 0.7%, extending gains to about 8% over the last four sessions, though the index remains roughly 7.5% below levels seen before MSCI warned of a possible downgrade to "standalone" status from "emerging market".
The rupiah slipped to 18,080 a dollar, its weakest level since late July. The movement of the rupiah remained manageable following MSCI's warning last week, an official at Indonesia's central bank said.
Markets in Taiwan were closed on Friday ahead of the arrival of Typhoon Champi, while Thailand's stock market was shut for a public holiday.
HIGHLIGHTS:
** South Korea central bank governor says stronger won is appropriate
** Indonesia energy ministry to consider additional quota for subsidised fuel as demand rises
** Ambani's $3.2 billion Jio Indian IPO lures investors as bids surge on final day
** Hold, hike and cut? Bank Indonesia says there's logic to the policy mix - Reuters
