(May 4): Chipmakers carried South Korea and Taiwan equities to record closing highs on Monday, as strong tech earnings and strong data fanned the AI-driven rally, while currencies in the region were lacklustre as Middle East tensions lingered.
President Donald Trump said the United States will begin an effort to free up ships stranded in the Strait of Hormuz, without elaborating on the plan, while Iran’s military warned US forces not to enter the strait.
Currencies in Southeast Asia remained under pressure.
Investors awaited inflation and growth data for the Philippines, due later this week, as they watch for the economic impact from the Iran conflict.
The Philippines’ dependence on Middle Eastern oil supplies has made the currency less attractive, as oil continues to trade above US$100 a barrel, raising the country’s fuel bill and leading to concerns over inflation and growth.
The peso has fallen 6.6% since the Iran war began, making it among the worst hit Asian currencies.
The Indonesian rupiah, which hit an all-time low of 17,385 per dollar last week, was down 0.4% at 17,380 and on course to fall for a fifth straight session. The currency has fallen 3.6% since the war started.
“Elevated crude keeps weighing on net energy importers like Indonesia and the Philippines through trade balances and inflation, keeping the rupiah and peso under pressure despite a softer USD,” said Glenn Yin, director of research at ACCM.
Stocks in Seoul soared 5.1% to post an all-time closing high, after No 2 memory chipmaker SK Hynix added 12.5% to end at its highest ever closing level.
Positive chipmaker earnings last week signaled strong AI-driven demand, while data showed South Korea’s factory activity expanded at the strongest pace in more than four years in April, as semiconductor demand continued to power both output and new orders.
Taiwan stocks ended the session up 4.6% at a record close. The largest contract chipmaker and East Asia’s most-valuable listed firm, TSMC, added 6.6%.
The two East Asian benchmarks started off the month strong, showing no signs of slowing after posting their best month in decades. The South Korean index has gained 64.6% this year so far, while Taiwan has added 40.5%.
“AI themes continue to dominate, particularly semiconductors as the picks and shovels of the supply chain; earnings, sales and margins remain positive,” said Nick Ferres, CIO of Vantage Point Asset Management.
The data-packed week started off with Indonesia’s inflation data, which showed monthly inflation easing to 0.13% in April, lower than the median forecast of 0.42% in a Reuters poll.
The Philippines’ inflation and Indonesia’s GDP numbers are the other data points that investors will look at to gauge the impact of the Middle East war on prices and growth.
Uploaded by Magessan Varatharaja
