South Korea, Taiwan stocks scale new records on trade deal optimism

• South Korea and Taiwan stocks hit record highs
• ASEAN equities rise, led by Singapore banks
• Indonesia stocks surge ahead of expected rate cut

By Sameer Manekar

Oct 21 (Reuters) - Equities in South Korea and Taiwan set new records on Tuesday as optimism about Seoul's trade deal with the United States and enthusiasm for AI-related investments kept the appetite for risk assets running hot.

Asian equities gained fresh traction this week on hopes of easing U.S.-China trade tensions and a robust kick-off to the U.S. corporate earnings season.

Broadly, the Federal Reserve's rate-cutting cycle and investor enthusiasm around artificial intelligence have continued to fuel the rally in emerging market assets.

"The 'buy almost everything' trade has been reinvigorated as concerns about U.S. regional banks, credit, and funding markets continue to fade into the rear-view mirror," said Chris Weston, head of research at Pepperstone.

"Trump continues to signal optimism around trade negotiations with China and markets are reducing expectations of the 100% additional tariffs on Chinese imports going into effect on November 1."

U.S. President Donald Trump said on Monday he expects to reach a fair trade deal with Chinese President Xi Jinping and downplayed risks of a clash over the issue of Taiwan, even as his top trade negotiator accused Beijing of engaging in "economic coercion."

The MSCI gauge of emerging market equities .MIMS00000PUS jumped more than a percentage point to its highest level since late February 2021. A gauge tracking ASEAN equities .MISU00000PUS, dominated by Singapore's banks, jumped 1%.

South Korea's KOSPI index .KS11 advanced for a fifth consecutive session on hopes that the East Asian country will secure a trade deal with the United States by the time of the Asia-Pacific Economic Cooperation (APEC) summit later this month.

Hyundai Motor <005380.KS> leapt 7.7%, while sister automaker Kia Corp 000270.KS surged 4.28%. Chipmaker Samsung Electronics 005930.KS scaled a new record high while SK Hynix 000660.KS touched a 25-year high. .KS

Taiwan's benchmark index .TWII also set a new record high but stopped a few points shy of breaching the 28,000-level for the first time. Its flagship contract chipmaker, TSMC 2330.TW, also scaled a new lifetime high, its eighth this month.

Singapore's FTSE Straits Times index .STI advanced 1.7%, marking its strongest single‑session gain in nearly three weeks. Top lenders DBS Group DBSM.SI, OCBC OCBC.SI, and United Overseas Bank UOBH.SI advanced up to 1.7%.

Indonesia's stocks .JKSE jumped 1.4% to a one-week high, driven by Bank Central Asia BBCA.JK, which advanced about 5% after the country's top lender by market value reported healthy growth in total loans and profits for the first nine months of the year.

The rush into equities precedes Bank Indonesia's monetary policy decision tomorrow, where the central bank is widely expected to cut its key interest rate at its fourth consecutive meeting, a Reuters poll showed.

The rally also comes as the central bank shifts its priority towards growth despite continued weakness in the rupiah and rising concerns about the central bank's independence. That reflects in the Jakarta Composite index's near 7% gain since the reputed finance minister Sri Mulyani Indrawati was ousted early last month.

Elsewhere in Southeast Asia, shares in Thailand .SETI and Malaysia .KLSE rose up to 0.8%, while stocks in the Philippines .PSI rose up to 0.8%.

Vietnam's benchmark stock index .VNI nursed losses after plunging more than 5% on Monday after state media reported on alleged irregularities in the use of corporate bond proceeds.

Currencies in the region were largely unchanged, with Taiwan's dollar TWD=TP edging higher, while Indonesia's rupiah IDR= ticked lower.