EMERGING MARKETS-Stocks start year-end week on firm note, Taiwan hits record high

South Korean stocks hit highest since November 4 Thai baht down 0.6%, cuts YTD gain to 9.94% By Rajasik Mukherjee Dec 29 (Reuters) - Equities in Taiwan surged to an all-time high on Monday, while those in South Korea jumped to an eight-week peak, kicking off the final week of the year on a positive note. An MSCI gauge of emerging Asian equities (.MIMS00000PUS) inched higher, touching its highest level since mid-November. It was set to end 2025 with a 30% gain, its best since 2017, largely driven by the two tech-heavy East Asian countries that make up 40% of the constituents. Taiwan’s benchmark equities index (.TWII) rose as much as 1% to a record high of 28,832.55 on Monday, and was on track to end 2025 with a more than 25% gain, marking its third annual growth exceeding a quarter of its value. The rally reflects the island’s pivotal role in the global artificial intelligence supply chain, with TSMC (2330.TW) as its crown jewel, attracting steady inflows from domestic investors who bet on its structural advantages, even as overseas investors fret over stretched valuations and tensions with Beijing. Investors say Taiwan’s benchmark index is poised to breach the 30,000 level in 2026, extending a three-year surge that has seen the stock market nearly double in value on the AI wave. TSMC, the world’s largest contract chipmaker, has been at the forefront of the AI-led rally in Taiwan, rising more than 40% this year, and is expected to continue to be the key driver. “AI remains the tech sector mega-trend, and we are positive on the growth outlook… without TSMC, the AI boom and all ensuing mega deals would not have been possible,” KGI Research said in a note. “We believe the AI investment bubble is a long way from bursting point. General server demand growth in 2026 will exceed historical rates.” South Korean stocks are in a league of their own. The benchmark KOSPI (.KS11) advanced as much as 2.1% on Friday to hit its highest since November 4, and was on course to end the year with over 70% growth, making it the best performing stock market in the world. In Southeast Asia, Indonesian stocks (.JKSE) rose 0.8%, while Philippine shares (.PSI) gained 0.4% to their highest in about two weeks. Among currencies, the South Korean won (KRW=KFTC) rose 0.7% to hover around early November highs. It has appreciated over 3% against the dollar since last week, when Reuters reported that the country’s national pension service had initiated steps to boost the currency. The Thai baht (THB=TH) depreciated 0.7% to 31.190 a dollar, offering a brief respite for exporters after weeks of appreciation due to heavy gold trading, though the currency remains uncomfortably strong with around 10% gains. With Monday’s losses, the baht has ceded its spot as Asia’s best performing currency to Malaysia’s ringgit (MYR=) . HIGHLIGHTS: Yield on Indonesia’s 10-year government bond (ID10YT=RR) at 6.120% BOJ debated need for more rate hikes even after December move, summary shows Philippine central bank sees December inflation at 1.2% to 2.0% China launches war games around Taiwan as island vows to defend democracy Asia stock indexes and currencies at 0337 GMT COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS % DAILY YTD % % Japan (JPY=) +0.12 +0.53 (.N225) -0.39 26.72 China S * India (INR=IN) -0.06 -4.77 (.NSEI) 0.00 10.14 Indonesi (IDR=) -0.15 -4.08 (.JKSE) 0.75 21.50 a Malaysia (MYR=) -0.15 +10.29 (.KLSE) -0.24 1.87 Philippi (PHP=) -0.15 -1.21 (.PSI) 0.28 -6.84 nes S.Korea C * Singapor (SGD=) -0.05 +6.32 (.STI) 0.05 22.46 e Taiwan (TWD=TP) +0.08 +4.30 (.TWII) 0.74 24.89 Thailand (THB=TH) -0.61 +9.94 (.SETI) -0.32 -10.35 Graphic: World FX rates here Asian stock markets here