Asian Equities Slide as Tech Rout Extends and Indonesia Slumps on Credit Outlook Shock

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Summary:

Asian stock markets retreated as a deepening technology selloff weighed on sentiment, while Indonesian assets came under sharp pressure after a negative shift in the country’s credit outlook intensified investor concerns....

Tech Weakness Spills Across Asian Markets

According to Reuters, Asian equities fell on Friday as investors continued to pull back from technology stocks, following renewed weakness in U.S. tech markets. South Korean shares led the decline, with the KOSPI dropping 1.7%, dragging the MSCI index of emerging Asian equities down 0.5%. A broader gauge of Asian stocks excluding Japan slid by nearly 2%, highlighting how concentrated selling in technology spilled into regional benchmarks.

In Seoul, heavyweight chipmakers Samsung Electronics and SK Hynix fell 1.2% and 0.2% respectively, pushing the regional information technology index down about 2.4%. The pressure reflects investor caution rather than a collapse in sector fundamentals, as positioning had become increasingly stretched after a strong rally earlier in the year.

AI Developments Add To Sector Anxiety

Market sentiment was further unsettled after AI firm Anthropic unveiled a new legal tool for its Claude chatbot earlier this week. The announcement sparked concerns about broader disruption across the technology and software services sector, particularly for firms exposed to regulatory and legal risk. While the development itself does not directly alter earnings outlooks, it has heightened uncertainty at a time when valuations remain elevated.

Analysts note that the current selloff reflects de-risking behavior rather than a breakdown of the long-term technology theme. With U.S. tech stocks wobbling, negative sentiment has tended to correlate with Asian tech performance, especially in markets where gains had been driven by aggressive inflows and leveraged positioning.

Indonesia Hit By Credit Outlook Downgrade

Southeast Asia’s largest economy saw sharper losses. Indonesian shares fell more than 2% in early trading, with the Jakarta Composite Index extending its recent decline. The rupiah weakened to 16,885 per U.S. dollar, its lowest level since January 22, reflecting capital outflows and rising risk premiums.

Investor confidence deteriorated after Moody's lowered Indonesia’s credit rating outlook, citing concerns around policy uncertainty, a widening fiscal deficit, and questions over central bank independence under President Prabowo Subianto. The outlook change does not trigger an immediate downgrade, but it has reduced appetite for additional exposure, particularly among foreign investors with stricter risk constraints.

Foreign investors withdrew around $1 billion from Indonesian equities in 2025, and outflows have accelerated since mid-last week following warnings from MSCI about a potential reclassification toward frontier-market status. These developments are correlated with rising volatility in local assets rather than directly causing capital flight, but together they have amplified downside pressure.

Bond Markets And Policy Response In Focus

Indonesia’s 10-year government bond yield rose to 6.317%, reflecting higher risk compensation demanded by investors. Analysts at DBS expect near-term weakness in onshore financial markets as an initial reaction to the outlook change, with attention now shifting to how domestic policymakers respond. While rating-sensitive mandates are not immediately affected, investors are showing a preference for shorter-dated securities, signaling a more defensive stance.

Elsewhere in the region, market moves were more subdued. Stocks in Malaysia, the Philippines and Taiwan were largely flat, while Singapore’s benchmark index fell 0.7%. Thailand’s SET Index rose 0.5%, supported by pre-election positioning ahead of Sunday’s general election.

Currency markets reflected similar divergence. The South Korean won weakened to around 1,470.60 per dollar, its lowest level in over two weeks, while the Thai baht gained roughly 0.2%. Political events are also in focus, with Thailand voting on Sunday and Japan holding a snap election the same day, called by Prime Minister Sanae Takaichi. A strong showing by Japan’s ruling coalition could reduce expectations for a large fiscal stimulus, adding another layer of uncertainty to regional market sentiment.

Overall, the latest selloff underscores how fragile confidence remains across Asian markets. Technology stocks are bearing the brunt of global de-risking, while Indonesia’s outlook downgrade has exposed sensitivities around policy credibility, leaving investors cautious as political and macroeconomic risks converge.

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