BENGALURU (June 8): Technology shares in South Korea and Taiwan plummeted by the most in three months on Monday, while currencies in emerging Asia buckled against a strong US dollar, forcing authorities to be more aggressive in stemming the losses.
Stocks in Indonesia tumbled to their lowest in more than five years, the rupiah hit a new record low and 10-year Indonesian bond yields jumped to a 14-month high of 7.142%, highlighting a broad-based confidence shock.
Currencies in emerging Asia kicked off the week on a downbeat note: the rupiah fell to 18,170 a dollar, the Malaysian ringgit weakened by 1% to its lowest since mid-January and Taiwan’s dollar hit a three-week low.
Currencies and long-end bond yields across many emerging markets have come under pressure as elevated oil prices threaten to rekindle inflation in energy-importing economies, raising concerns about deteriorating fiscal balances.
AI rally hits a wall
The red-hot global rally in AI stocks lost steam after a robust US jobs report on Friday fuelled wagers for Federal Reserve rate hikes, unleashing a selloff in technology stocks from South Korea to the US.
Continued tensions in the Middle East, with a peace deal proving elusive, further sapped risk sentiment. Oil prices climbed more than US$3 (RM12.21) on Monday after renewed Israeli strikes on Lebanon and sounds of explosions in Tehran.
South Korea’s Kospi nosedived 9% to a three-week low, marking its worst day since early March. The drop triggered circuit breakers that halted trading for 20 minutes for the first time in three months and the third time this year.
The won snapped a five-session losing run to appreciate to 1,547.93 a dollar following jawboning by foreign exchange authorities.
The currency breached the key psychological level of 1,550 per dollar late on Friday, and has weakened more than 7% so far in 2026, making it the second-worst-performing Asian currency this year after the rupiah.
Foreign exchange authorities in South Korea said on Monday they would not tolerate and would strongly respond to excessive volatility compared with economic fundamentals.
Taiwan’s benchmark stock index also suffered from the tech selloff, shedding as much as 6% to mark its worst day since March 9, with the world’s top contract chipmaker, TSMC, falling 5.7%.
“After an extended run, corrections are typical, serving as a pause before further advances, especially when underlying structural factors remain supportive,” said Ecaterina Bigos, a chief investment officer at BNP Paribas Asset Management.
“For emerging markets like South Korea and Taiwan, structural tailwinds offer resilience, with longer-term prospects still intact if supply-demand dynamics hold steady,” she said.
South Korea’s Kospi and Taiwan’s main stock index remain up 81% and 50% this year, respectively, despite recent losses.
Confidence shock in Indonesia
Indonesian stocks fell more than 4% to their lowest since November 2020, extending 2026 losses to more than 37% and making the Jakarta Composite Index the world’s worst-performing stock market.
The rupiah also hit a lifetime low of 18,165 a dollar to become the worst-performing currency this year.
Investor confidence has been hammered by mounting concerns over fiscal deterioration, changes to the commodity export policy, an upcoming MSCI investability review and the risk of political interference in the central bank.
“Investors appear to be increasingly concerned about the direction of policymaking in Indonesia,” wrote Jason Tuvey, deputy chief emerging markets economist at Capital Economics.
Putting the currency on a more solid footing ultimately requires a shift in policymaking direction, and with no sign of that on the horizon, “risk premia on Indonesian assets is likely to rise further”, Tuvey said.
Elsewhere in Southeast Asia, Singapore’s benchmark gauge slipped 1.7%. Stocks in Thailand and Malaysia fell around 0.6% each, while those in the Philippines clawed back early losses to trade flat.
Officials in the Philippines issued tsunami warnings after a magnitude 7.8 earthquake struck off the southern island of Mindanao.
Uploaded by Chng Shear Lane
