Indonesia, Singapore buck weak Asian trend as investors rotate from AI

Indonesian and Singaporean equities are set to outperform their Asian peers this week, as investors rotate away from crowded artificial-intelligence trades into cheaper, under-owned markets.

The Jakarta Composite index rose as much as 1% to a two-week high, heading for a sixth consecutive weekly gain. The advance is being driven by a valuation-and-positioning story, according to Gary Tan, portfolio manager at Allspring Global Investments, who pointed to a stronger-than-expected quarterly GDP print as a supporting factor.

"Whether the rally can extend will depend on improving confidence in fiscal discipline, rupiah stability, foreign fund flows and progress in addressing market governance concerns," Tan said.

Singapore's FTSE Straits Times index climbed 1.1% to a one-week peak, also on track for a sixth straight weekly rise. Major lenders DBS Group and Oversea-Chinese Banking Corp hit record highs, with OCBC reporting record quarterly profit and raising its annual loan-growth forecast. The three largest banks account for roughly 32% of Singapore's benchmark index.

MSCI's gauge of ASEAN equities jumped 6% to its highest level in over five months, with Singapore making up more than half of the index and Indonesia around 8%.

Elsewhere, markets were subdued as crude prices rose amid concerns over the reopening of the Strait of Hormuz. Thai stocks fell as much as 0.5% before paring losses, while Malaysian shares slipped 0.3%.

South Korea's KOSPI reversed early gains to close 0.6% lower, while Taiwan's benchmark settled 0.4% down after swinging between gains and losses. For the week, Seoul is down 5.1% while Taipei has gained 2.3%, as concerns persist over the durability of hefty AI capital expenditure.

MSCI's broader EM Asia equities index, heavily weighted toward South Korea and Taiwan, slipped 0.2% and is on course for a 1.1% weekly decline.

Regional currencies were largely steady, though the South Korean won was an outlier, appreciating 1.2% week-on-week following reported coordinated intervention by Japan and South Korea.

Investors will next watch for economic growth figures from Singapore and Malaysia, along with South Korea's monthly employment report.