* South Korea's KOSPI plunges 10%
* Thai baht hits a 13-month low ahead of policy decision
* Rupiah, Jakarta stocks slip, investors await MSCI decision
(Updates for afternoon trade)
By Rajasik Mukherjee
June 23 (Reuters) - Asian equities retreated on Tuesday from
recent record highs as rising expectations of U.S. rate hikes
weighed on sentiment, while South Korean shares plunged 10% on
profit-taking, triggering a temporary trading curb.
Most emerging Asian currencies also came under pressure as a
firm U.S. dollar weighed, with the Thai baht down 0.6%,
hitting its lowest since May 20, 2025, a day ahead of its policy
meeting.
"Policy decision is due this week...we expect a hold given
domestic economic weakness whilst El Nino threatens to hit the
country's agricultural sector hard. Therefore, the carry is
going to remain unfavorable against the THB," Maybank analysts
said in a note.
Meanwhile, shares in Jakarta fell 1% and the rupiah
weakened to 17,860 per dollar, ahead of MSCI's verdict on
the country's market classification, due in early Asian hours on
Wednesday.
Globally, the pan-European STOXX 600 index fell
0.89%, while oil and gold prices fell more than 1% each, as
investors assessed U.S.-Iran peace talks.
TECH SLUMP, HAWKISH FED
The MSCI EM Asia equities index dropped more
than 4% after reaching an all-time high on Monday, dragged lower
by the slump in South Korea and Taiwan, which
together account for about 60% of the benchmark.
The MSCI index was set for its worst session since June 8.
South Korea's KOSPI, the region's best-performing
stock market so far this year, closed 10% lower, marking its
largest daily drop since March 4, driven by foreign selling of
Samsung Electronics (SSNLF) and SK Hynix following regulatory signals
that the chip rally had become overheated.
Major chipmakers Samsung Electronics (SSNLF) and SK
Hynix both shed over 12%.
Taiwan's benchmark gauge, another AI-heavy index in
the region, slipped 1.3% from an all-time closing high seen the
previous day.
"Taiwan and Korea are so heavily weighted towards technology
and AI-related themes that it should come as no surprise that we
are seeing a correction...In Korea, there are concerns about
leveraged retail investors," said Angus Mackintosh, ASEAN
specialist at Aletheia Capital.
Meanwhile, traders are grappling with expectations of an
accelerated schedule of rate hikes by a more aggressive U.S.
Federal Reserve under the leadership of new Chair Kevin Warsh.
Fed funds futures are pricing in a 75% chance of a hike by
September, while BofA Global Research and Deutsche Bank have
abandoned prior forecasts of steady policy and now expect the
U.S. central bank to raise rates within the year.
"The Fed was perceived more hawkish than expected and
markets have reacted by lifting the USD against most
currencies," said Fiona Lim, senior FX strategist, Maybank
Singapore.
The dollar index, which measures the greenback
against a basket of major currencies, edged slightly higher to
101.06, not far from the one-year high of 101.12 hit late last
week.
The Philippine peso slipped 0.3% to 61.166 per dollar
while the benchmark gauge jumped 1.5%.
In Malaysia, stocks edged lower, while the ringgit
rebounded from a seven-month low to trade 0.2% higher at
4.139.
HIGHLIGHTS:
** Yield on Indonesia's 10-year government bonds
jumps 8.9 bps to 7.218%
** Thai cabinet approves $115 billion draft budget bill for
2027 fiscal year, official says
** Indonesia's emerging markets crown on the line as MSCI
verdict looms
Asia stock indexes and currencies at 0727 GMT
COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS
% DAILY YTD %
%
Japan +0.06 -2.97 -3.55 38.6
China India -0.22 -5.29 -0.61 -8.32
Indonesia -0.20 -6.66 -1.02 -29.99
Malaysia +0.17 -2.01 -0.70 0.52
Philippin -0.30 -3.87 1.51 1.21
es
S.Korea Singapore -0.09 -0.66 0.26 12.30
Taiwan -0.03 -0.64 -1.34 62.62
Thailand -0.53 -5.00 -1.23 23.42
(Reporting by Rajasik Mukherjee in Bengaluru; Editing by Sherry
Jacob-Phillips and Janane Venkatraman)
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