Asian stocks rebound as South Korean shares surge on AI optimism; currencies lag

BENGALURU (June 25): A surge in South Korean stocks helped a gauge tracking Asian equities to regain its footing on Thursday, with upbeat Micron Technology results reviving confidence in artificial intelligence (AI) demand, while regional currencies weakened against a strong US dollar.

The MSCI emerging-market Asian gauge was about 2% higher, rebounding from a near two-week low.

South Korea’s Kospi index rose as much as 6%, on track for its best session since June 12.

Over two sessions, the index, a heavyweight on the MSCI gauge, has risen nearly 8% from Tuesday’s 10% drop, the steepest since March, which sparked a global tech sell-off.

The volatility underscores investor concerns that valuations for AI-related companies have become stretched following years of gains. South Korean market regulator’s signals that the sector’s rally had gotten overheated added to those fears.

Samsung Electronics and SK Hynix shares rose by 6.2% and 11.6% respectively on Thursday, as chipmakers rallied, tracking Micron Technology’s upbeat quarterly results.

SK Hynix’s plans to raise up to US$29.4 billion (RM121.0 billion) through a US stock market listing in what would be among the biggest listings globally, also lent support to the positive sentiment.

“Targeted sell-off suggests investors are enforcing strict valuation discipline following an extended, aggressive run in AI-adjacent and speculative growth equities…serving notice that realised earnings must now step up to justify stretched multiples,” said Chris Strazzeri, a financial dealing manager at Moomoo Australia and New Zealand.

“And that’s pretty much what Micron delivered after-market, with its powerhouse result boosting tech sentiment overall.”

Taiwanese shares, another tech-heavy index in the region, rose as much as 1.6%.

Elsewhere, Thailand’s stock index rose over 1%, a day after its central bank kept its rates steady, while upgrading its economic growth forecasts.

Indonesian equities rose 1.5%, on course to snap a three-day losing streak, while stocks in Manila traded in the green.

The dollar was heading toward its sharpest monthly gain in almost a year on Thursday, as traders bet a strong US economy would prop up short-term interest rates, putting pressure on the emerging Asian currencies.

“Asian foreign exchange has come under broad-based pressure against the US dollar, with several Asean currencies leading losses since last week’s FOMC (Federal Open Market Committee) meeting,” MUFG analyst Lloyd Chan said in a note.

“A high-for-longer US rates environment is likely to remain a near-term headwind for regional currencies, particularly lower-yielding ones.”

The Philippine peso led losses, declining 0.6%. The currency was set to lose for the seventh time in the last eight sessions.

The South Korean won and the Taiwan dollar both inched 0.3% lower, while the Indonesian rupiah traded largely flat.

The Thai bah eked out marginal gains, snapping a six-session streak of declines.

“The recent baht weakness came from relatively strong levels amid still-robust external position, which could support tourism and ease financial conditions for smaller exporters,” said Chua Han Teng, a senior economist at DBS.

The ringgit and the Indian rupee went against the tide to trade higher, each appreciating over 0.5%.

In other news, powerful earthquakes struck Venezuela on Wednesday afternoon, toppling buildings in the capital Caracas, trapping people in the rubble and prompting scientists to warn of potentially heavy casualties and widespread destruction.