EMERGING MARKETS-Emerging Asia stocks ease from record highs, FX slide against slightly firmer dollar

By Shivangi Lahiri

Jan 7 (Reuters) - Emerging Asian stocks slipped on Wednesday, easing from record highs scaled recently due to AI-led capital flows, but clawed back some losses in afternoon trade, while most currencies were on the defensive against a slightly firmer dollar.

The MSCI index of emerging Asia equities .MIMS00000PUS snapped an eight-session rally that had lifted it to near five-year highs, but stayed 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 ended 0.5% lower at 30,435.47 points, about 150 points shy of its lifetime high scaled on Tuesday.

South Korea's KOSPI index .KS11, another tech-heavy equity gauge, recouped losses in the afternoon to finish at a record closing high of 4,611.72 points, boosted by chipmakers Samsung Electronics 005930.KS and SK Hynix 000660.KS.

The retreat in equities following a robust artificial intelligence-driven run towards the end of 2025 underscores lingering valuation worries, even as long-term confidence in AI spending continues to underpin demand for risk assets.

Traders remained largely unfazed by the U.S. military intervention in Venezuela and the threats of more military action in the region, but continued to watch its after-effects on the oil market closely.

U.S. President Donald Trump said Venezuela would be "turning over" up to 50 million barrels of oil to be sold at market prices after the nation's leader was toppled and captured, remarks that resulted in a further slide in oil prices. 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", since most economies in the region are net oil importers.

In Southeast Asia, Indonesian stocks .JKSE stayed a few pips shy of a record high hit earlier in the day, while Singapore's shares .STI were trading largely unchanged near its lifetime peak. 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 prospects for currency appreciation and appealing 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 inched higher, while the baht THB=TH slipped 0.3%.

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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