Emerging Asian equities gain as dollar, oil pressure FX

Emerging Asian equities hit a record as AI bellwethers drove gains. Firmer oil and a stronger dollar pressured EM FX amid unclear prospects for a US–Iran ceasefire.

The MSCI Emerging Markets Index rose as much as 2% intraday to a new high on Monday, paced by AI-linked leaders in South Korea and Taiwan. A broad EM currency gauge slipped as crude advanced and the greenback strengthened with ceasefire negotiations still opaque.

AI leaders extend run as Korea sets records

South Korea’s Kospi notched an all-time high, with Samsung Electronics (005930.KS), SK Hynix (000660.KS) and LG Electronics (066570.KS) at the front. The move adds to a global equity rally that has leaned heavily on the artificial intelligence trade despite the Iran war.

Regional software names also firmed after Workday (WDAY) and Google Cloud (GOOGL) expanded their partnership to deepen AI agent integration. The announcement fed into momentum across Asia’s tech complex, where hardware and software beneficiaries continue to attract flows.

Tailwinds, but concentration risk stays elevated

Economists at Moody’s Analytics led by Denise Cheok noted the AI upswing remains intact even with multiple risks on the horizon. They added that the boom has supported growth in parts of Southeast Asia tied to the tech ecosystem, while warning that reliance on a single segment heightens vulnerability to a sharp drop in AI demand.

That narrow market breadth is increasingly visible: gains are clustering around chipmakers, electronics giants and select software partners. Outside of the AI complex, the macro setup—higher oil and a firmer dollar—typically tightens financial conditions for importers and weighs on EM currency performance.

Liquidity thins on holidays as FX softens

Trading liquidity was lighter with stock markets in Singapore, Indonesia, Malaysia and Thailand closed for a holiday. With fewer regional price discovery points, index-level moves skewed toward large-cap AI beneficiaries in North Asia.

The dollar’s strength and rising crude prices kept pressure on EM FX, reflecting lingering uncertainty around a possible US–Iran ceasefire deal. For equities, the key question is whether leadership can broaden beyond AI hardware and agents—or whether the rally remains tethered to one trade.

Next steps hinge on three levers: clarity on ceasefire talks, the path of oil and the dollar, and signs of demand durability across the AI supply chain. If breadth improves, record levels could prove more durable; if not, concentration risk remains the key fault line.