Stocks ease, but eye double-digit gains in 2025 on AI-driven inflows

By Rajasik Mukherjee

Dec 30 (Reuters) - Asian stocks pulled back slightly on Tuesday as investors held off big bets at the end of 2025, though most of them remained on track for robust double-digit annual gains fueled by the AI boom and resilient economic fundamentals.

An MSCI gauge of emerging Asian equities .MIMS00000PUS traded around its six-week high. With the tech-heavy stocks in Taiwan and South Korea making up two-fifth of the index, it is set to end the year 30% higher, its best since 2017.

The high-flying Taiwan stocks TWII slipped 0.6% on the day after gaining for six consecutive sessions. The benchmark added around 4% in six sessions, and is on track to end the year with 25% gains, marking its third consecutive year of robust gains.

South Korea's KOSPI .KS11 continues to lead global markets with a historic 75% surge this year, the best since 1999. The benchmark gauge shed as much 0.8% on Tuesday, marking only its second decline in the past seven trading days.

Robust capital inflows into the AI supply chain fueled the exceptional 2025 performance of South Korean and Taiwanese equities, cementing both markets as the primary beneficiaries of the AI revolution.

Southeast Asian markets also enjoyed a stellar year. Strong growth fundamentals and attractive valuations drew investors to the region, propelling equities toward solid double-digit advances.

Singapore's FTSE Straits Times index .STI scaled a fresh record high of 4,665.12 points on Tuesday, pushing its annual gains to over 23%, its best year since 2009. The index reset its record peak on at least 27 days in 2025.

While traditional heavyweights DBS Group DBSM.SI and OCBC OCBC.SI delivered strong gains, stocks from other sectors such as telecom firm Singtel STEL.SI and defence firm ST Engineering STEG.SI, among others, also bolstered the benchmark.

JPMorgan analysts in a note late last month flagged that Singapore equities had a "long way to go as the government continues to deliver policies to boost the equities market".

Elsewhere, Indonesian stocks .JKSE skid 0.4%, while those in Malaysia .KLSE shed 0.3%. While the former is set to end the year 22% higher on the back of energy, industrials, and technology stocks, the latter is ending 2025 with a 2% gain.

Currencies were largely muted as participation in the market remained thin during year-end holidays. The MSCI index of emerging Asia currencies .MIEM00000CUS traded largely flat on the day.

The Thai baht THB=TH fell sharply on Monday and extended its losses into the second session to trade at 31.510 a dollar, its lowest in about two weeks.

The Thai currency remains strong, with about 9% gains in 2025, threatening its key growth drivers: exports and tourism.

In Malaysia, the ringgit MYR= appreciated to 4.0510 per dollar. The currency has appreciated over 10% this year, its best since 2017, making it the top performer in the region.

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