EMERGING MARKETS-Asian shares ease, set for robust annual gains 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 percent annual gains fuelled by the AI boom and resilient economic fundamentals.

An MSCI gauge of emerging Asian equities .MIMS00000PUS, largely flat on the day, was set to end the year 30% higher, its best since 2017, driven by sharp gains in tech-heavy stock markets in Taiwan and South Korea, which make up two-fifths of the index.

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 a nearly 25% rise, 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 as 0.8% on Tuesday, marking only its second decline in the past seven trading days.

Robust capital inflows into the AI supply chain fuelled 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 with Singapore's FTSE Straits Times index .STI scaling 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 touched a record level 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 fell 0.4%, but remained on track to end the year nearly 22% higher on the back of energy, industrials, and technology stocks.

The index was on track for its best year since 2014, supported by strong equity inflows of about 32.163 trillion rupiah ($1.92 billion) in the second half of the year, LSEG data showed.

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.

China's onshore yuan CNY=CFXS hit 6.9960 per dollar, the strongest since May 2023, as exporters rushed to sell U.S. dollars before the year ends.

The Thai baht THB=TH extended 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.

"Strong THB could be quite negative to Thailand's economy especially if baht is quite strong against trading partners currencies which will reduce competitiveness of its exports," said Poon Panchibool, markets strategist with Krung Thai Bank.

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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($1 = 16,765.0000 rupiah)