Indonesian and South Korean stocks tumbled more than 5% each on Monday, while emerging Asian currencies slipped against the U.S. dollar, as investors weighed how President Donald Trump’s pick for the Federal Reserve chair could shape U.S. monetary policy.
MSCI’s global emerging markets index and its emerging Asia counterpart declined about 3% each in their steepest intraday falls since late November.
A global EM currencies gauge was down 0.4% as the U.S. dollar index hung on to its gains from last week fuelled by Trump’s pick of Kevin Warsh as the next Fed chair.
The week opened on a dismal note, with investors exiting positions after weeks of gains in most equity markets and precious metals, as they weighed Warsh’s approach to monetary policy and his preference for a smaller balance sheet.
“Overall sentiment across Asian emerging markets is fragile and defensive today,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore.
“Markets are still digesting the global volatility triggered by Trump’s nomination of Warsh as the next Fed chair, which has led to sharp repositioning across FX, rates and commodities.”
Among precious metals, spot gold and silver extended their routs following increases in CME precious metals margin requirements that are set to take effect at the session’s close.
In equities, South Korea’s KOSPI index retreated 5.6%, dragged lower by blue-chip stocks including Samsung Electronics, SK Hynix and Hyundai Motor . They fell between 5% and 9%. Stocks in Taiwan fell 2.2%, with top contract chipmaker TSMC shedding 1.6%.
Indonesia’s Jakarta Composite index slumped 5.7%, extending last week’s sharp selloff after an MSCI warning over transparency concerns sparked an $80 billion rout.
Foreign investors net sold about $781 million worth of stocks in January, the highest since April 2025, and added to about $1 billion outflows in 2025, LSEG and IDX exchange data showed.
Markets are likely to remain volatile in the near term, with sentiment towards Indonesian assets expected to stay cautious until recent reform measures are implemented effectively and policy steps restore confidence, said Horchani.
Among currencies, South Korea’s won slumped over 1%, while the Taiwan dollar fell 0.6% and was on track for its worst day since August 21.
Thailand’s baht slipped 0.5% ahead of the February 8 election, a showdown between three big parties that could lead to the country’s fourth prime minister in less than three years.
The Indian rupee rose 0.4%, supported by likely central bank intervention before the market opened, traders said, after the currency came under pressure following a budget-triggered selloff in local stocks.
HIGHLIGHTS:
** BOJ debated risk of being ‘behind the curve’ on inflation, January summary shows
** Indian central bank likely intervened before market open to support rupee, traders say
** Yield on Indonesia’s 10-year government bonds at 6.323%
** Markets in Malaysia closed for a holiday – Reuters
