* South Korea's KOSPI pares losses to end 0.2% lower
* Indonesian stocks set for worst June since 2015
* Iran and U.S. agree to halt attacks and renew talks
* South Korea unveils $576 billion AI-chip investment
powered by Samsung, SK Hynix
(Updates for afternoon trade)
By Rajasik Mukherjee
June 29 (Reuters) - Asian markets were choppy on Monday as
investors weighed AI-driven growth against rising cost
pressures, while South Korea's sweeping investment push into
chips and AI steadied sentiment after recent losses and a
fragile U.S.-Iran ceasefire.
The MSCI EM Asia gauge inched higher and the
index tracking ASEAN stocks advanced 0.6%. Both
indexes hit a two-week low in the previous session.
Equity markets moved unevenly, reflecting investor caution
over stretched AI-driven rallies, particularly in South Korea
and Taiwan, and lingering uncertainty about how rising costs
could filter through the sector.
South Korea's KOSPI, which lost 7% last week, shed
as much as 3.4% earlier in the session on Monday,
However, it pared much of its losses, ending 0.2% lower,
after South Korea rolled out sweeping chip and AI mega-projects,
with investments worth more than $576 billion over several
years.
With the AI investment cycle becoming increasingly capital
intensive, "investors are likely to question whether demand for
AI chips and data centre capacity can continue growing fast
enough to justify such aggressive spending," said Lukman Leong,
an analyst at Doo Financial Futures, a brokerage.
Stocks in Taiwan gained as much as 2.1%. The index
has risen about 56% so far this year and is the
second-best-performing market in the region behind the KOSPI's
nearly 100% rally.
In Southeast Asia, Thailand's stock index rose 1.7%,
driven mainly by electronic products manufacturer Delta
Electronics Thailand's 5% gains on Monday. The firm,
which counts Nvidia as a client, has surged 84% this year.
Globally, the U.S. and Iran traded fresh strikes over the
weekend before they agreed to stop their tit-for-tat attacks and
meet in Qatar on Tuesday, leaving investors nervous about a
fragile ceasefire.
Malaysian shares shed 0.4%. Equities in Jakarta
slid 1% and were set for their worst June since 2015.
The index was also tracking its sixth consecutive month of
declines, with losses of about 4.7% in June.
The dollar index was steady around 101.34, supported
by lingering geopolitical uncertainty and rising prospects of a
Federal Reserve rate hike this year.
"Across EM Asia, regional currencies are broadly stable,
with the lack of a sustained spike in oil prices easing pressure
on net energy importers such as India, Thailand, and the
Philippines," added Leong.
"The relatively muted market reaction also reflects
expectations that any Middle East conflict will remain
contained, allowing investors to refocus on domestic
fundamentals."
The Malaysian ringgit led gains, rising more than
0.6% to 4.057 per dollar, touching its highest point in nearly
two weeks. The Indonesian rupiah advanced to 17,850 per
dollar.
The Philippine peso and the Thai baht were
largely flat. The South Korean won fell 0.4%, the
Taiwanese dollar inched 0.2% lower.
Elsewhere, the Bolivian government said on Friday that the
country would adopt a flexible exchange-rate system, effectively
devaluing its currency by ending a 15-year dollar peg, in a
major policy shift aimed at restoring economic stability.
HIGHLIGHTS:
** Yield on Indonesia's 10-year bonds at 7.182%
** China's central bank offers 300 billion yuan in new
overnight reverse repos
** Indonesia Stock Exchange shareholders approve CEO
appointment
** Venezuela quake death toll nears 1,500 as rescue work
goes on
** Thai lawmakers begin debate on $115 billion budget for
2027
Asia stock indexes and currencies at 0704 GMT
COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS
DAILY % % DAILY YTD %
%
Japan -0.04 -3.18 0.15 38
China India +0.08 -4.72 -0.34 -8.25
Indonesia +0.31 -6.61 -0.93 -32.45
Malaysia +0.69 -0.02 -0.32 -1.06
Philippine +0.16 -3.85 0.68 1.00
s
S.Korea Singapore +0.02 -0.56 0.16 11.92
Taiwan -0.08 -1.40 0.96 55.37
Thailand +0.08 -5.54 1.75 24.58