Emerging Asian stock markets moved mostly higher on Monday, powered by impressive gains in Taiwan and South Korea, even as regional currencies struggled under the weight of uncertainty surrounding ongoing U.S.-Iran peace negotiations.
The MSCI EM Asia gauge climbed more than 1.5%, reaching a record high. The surge was largely fueled by artificial intelligence-related stocks in South Korea and Taiwan, which together account for roughly 60% of the index.
Taiwan’s main stock benchmark soared more than 3%, hitting a record high of 47,871.190 points and positioning itself for a sixth straight session of gains. South Korea’s KOSPI index also jumped more than 2%, hovering near its own record high set just last Friday.
Glenn Yin, director of research at brokerage ACCM, weighed in on the day’s trading activity. “Today’s equity trading shows that AI remains the strongest counterweight to geopolitics and higher rates,” he said.
Yin also noted the regional dynamics at play: “Korea and Taiwan are being treated as direct beneficiaries of the semiconductor and AI capex cycle, while Japan is getting an extra boost through large tech and AI-linked names.”
Both markets have emerged as the biggest winners in the global AI investment frenzy, with investors increasingly willing to bet on AI-driven growth even as concerns linger over the Iran conflict and the status of the Strait of Hormuz.
Mediators announced that the U.S. and Iran agreed to a roadmap aimed at reaching a final deal within 60 days. However, that progress was complicated when Tehran announced it had again closed the Strait of Hormuz, and U.S. President Donald Trump reiterated threats to resume military strikes against Iran.
A stronger U.S. dollar kept pressure on Asian currencies, with the murky outlook for U.S.-Iran peace talks making it harder for investors to increase their exposure to emerging market assets.
The MSCI EM currencies gauge slipped 0.3%, marking its third consecutive losing session. Indonesia’s rupiah weakened to 17,818 per dollar, while India’s rupee ended a six-session winning run, falling to 94.405 against the dollar.
Attention is also turning to Indonesia, where investors are awaiting MSCI’s decision on whether to change the country’s emerging market classification. The highly anticipated ruling could either provide relief to a struggling market or deliver another setback to Southeast Asia’s largest economy. MSCI is expected to release its decision in the early Asian hours on Wednesday.
“A downgrade would likely exacerbate capital outflows and could reinforce risk aversion, and open the door to even more downside risk for the country’s equity and currency,” Yin added.
South Korea’s won fell 0.5% to 1,538.8 per dollar, not far from a two-week low. The Philippine peso also dropped to its weakest level since June 12, extending its losing streak to five consecutive sessions.
In Latin America, right-wing Colombian presidential candidate Abelardo De La Espriella claimed a narrow victory in Sunday’s election, according to an initial ballot count. Voters backed his Donald Trump-endorsed platform, which centered on cracking down on crime and strengthening the economy.
Other notable developments in the region include SK Hynix overtaking Samsung Electronics to become South Korea’s most valuable company, Japan’s finance minister pledging readiness to intervene in yen markets at any time, and China holding its lending benchmark rates — known as LPRs — unchanged for the 13th consecutive month in June.
