Stocks slip from AI-driven record highs, currencies on the defensive

• Taiwan, S.Korea, Singapore shares slip from records
• MSCI EM Asia slips from February 2021 high
• Indonesian stocks climb a record peak
• Singapore's dollar falls from mid-September high

By Shivangi Lahiri

Jan 7 (Reuters) - Emerging Asia shares declined for the first time in 2026 on Wednesday, after an artificial intelligence-led rally drove most benchmarks to record peaks, while currencies extended losses as the U.S. dollar held its gains ahead of key economic data.

The MSCI index of emerging Asia equities .MIMS00000PUS dipped 0.6%, snapping an eight-session rally that had lifted it to near five-year highs and within a few points of its record peak hit on Tuesday.

A broader gauge of global EM equities .MSCIEF posted its biggest drop in three weeks, after eight straight sessions of gains.

Taiwan's technology-weighted equity benchmark .TWII fell from a record high of 30,576.30 scaled on Tuesday after advancing more than 6% in the prior six sessions.

South Korea's KOSPI index, another tech-heavy equity gauge, scaled a record high of 4,611.72 in the early hours and traded mainly in the green before dipping as much as 0.8% in the afternoon.

The equity pullback after a strong AI-led rally highlights valuation concerns, though long-term optimism around AI investment continues to support broader risk appetite.

Traders largely brushed off the U.S. military intervention in Venezuela, but continued to watch its after-effects on the oil market closely.

U.S. President Donald Trump said Venezuela will be "turning over" up to 50 million barrels of oil to be sold at market prices following the toppling and capture of the nation's leader, causing oil prices to continue their slide. O/R

However, MUFG's senior currency analyst, Lloyd Chan, said the expectations of oil prices being under pressure in the near term "tends to bode well for emerging Asia", given that most Asian economies import oil.

In Southeast Asia, Indonesian stocks .JKSE inched up to a record high, while Singapore's shares .STI were flat near an all-time high. The Singapore dollar SGD= slipped from a more than three-month high touched the previous session.

Singapore equities are "a natural choice for portfolio diversification," the Bank of Singapore said in an emailed memo, citing the appeal of currency gains and attractive dividend yields.

"From a portfolio perspective, Singapore equities and bonds offer diversification and defensiveness during uncertain times," said Jean Chia, global chief investment officer at Bank of Singapore.

Thai equities .SETI edged higher, while the baht THB=TH was trading largely unchanged at 31.195 a dollar.

The country's headline inflation remained negative in December, but core inflation was in line with expectations.

However, Thailand's central bank warned the economy faces headwinds, including eroding competitiveness, with U.S. tariffs expected to weigh on exports.

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