Key facts
- Most emerging Asian stocks rose on Monday, with the MSCI EM Asia gauge hitting a record high.
- Taiwan and South Korea led the gains, driven by AI-related stocks.
- Regional currencies weakened due to uncertainty surrounding U.S.-Iran peace talks and a stronger U.S. dollar.
- The Indonesian rupiah, Indian rupee, South Korean won, and Philippine peso all saw declines against the dollar.
- Mediators reported a roadmap agreement between the U.S. and Iran, but tensions remain with Iran closing the Strait of Hormuz.
Most emerging Asian stocks advanced on Monday, with the MSCI EM Asia gauge reaching a record high, largely propelled by strong gains in AI-related stocks in Taiwan and South Korea. Taiwan's benchmark equities gauge surged over 3% to a new record, while South Korea's KOSPI index rose more than 2%.
Analysts noted that AI remains a significant counterweight to geopolitical concerns and higher interest rates, with Korea and Taiwan benefiting directly from the semiconductor and AI capital expenditure cycle. Japan also saw a boost from large tech and AI-linked companies.
Despite the equity market strength, regional currencies struggled against a stronger U.S. dollar. Uncertainty surrounding U.S.-Iran peace talks, including Iran's statement about closing the Strait of Hormuz and President Donald Trump's renewed threats, clouded investor sentiment. The MSCI EM currencies gauge dipped 0.3%, with the Indonesian rupiah, Indian rupee, South Korean won, and Philippine peso all weakening.
In Indonesia, market participants await an MSCI verdict on the country's emerging market status, with a potential downgrade posing risks to capital outflows and market stability. In Latin America, Abelardo De La Espriella secured a narrow victory in Colombia's presidential election.