Asian markets cautious; S.Korea equities hit 17-yr low vs USD

Asian markets closed the week on a cautious note, with South Korean equities experiencing the sharpest losses. The KOSPI index fell over 6%, and the Korean won reached its weakest level against the US dollar since March 2009. This downturn was partly triggered by a suggestion from South Korea's Labour Minister that companies benefiting from the AI boom should consider sharing excess profits, a theme that has previously unsettled Korean markets. In Japan, economic data showed real wages rising for the fourth consecutive month in April, marking the longest streak in five years, with both nominal earnings and household spending exceeding forecasts. This strengthens the Bank of Japan's position ahead of its June 15-16 policy meeting, where a rate hike is increasingly anticipated. Finance Minister Katayama reiterated Tokyo's readiness to intervene in the currency market, with USD/JPY trading around 160, although the pair saw little movement due to subdued dollar trading ahead of US payrolls data. Japanese equities declined, influenced by negative sentiment in the tech sector following the South Korean sell-off and broader caution around AI-related stocks. Hong Kong stocks also fell after Beijing intensified controls on cross-border capital outflows. Mainland Chinese markets performed more steadily, supported by the People's Bank of China's resumption of open market operations after a two-day pause. Separately, an explosion near Oman's Mina al Fahal crude terminal on the Gulf of Oman, allegedly a drone attack, raised concerns about conflict risk extending beyond the Strait of Hormuz to open-water export facilities. In the US, reports indicated that senior Trump administration officials have discussed with major AI companies, including OpenAI, the possibility of the government taking voluntary equity stakes, with potential returns distributed to citizens as an AI dividend. These talks are in their early stages.