EMERGING MARKETS-Indonesia outperforms on bargain-buying as AI-driven selloff hits North Asia

By Roshan Thomas

Nov 5 (Reuters) - Indonesian shares rose more than 3% and the rupiah strengthened on Thursday as investors snapped up beaten-down assets, while a selloff in AI stocks hit South Korean and Taiwanese markets.

Sentiment towards Indonesian stocks has soured this year after an MSCI warning that the country could face a downgrade from its emerging-market benchmarks due to concerns over market transparency and trading practices.

"After the recent selloff, Indonesian equities are trading at historically very cheap valuations, while underlying macro and corporate fundamentals have not deteriorated to the same extent," said Fakhrul Fulvian, chief economist at Trimegah Sekuritas Indonesia.

Supporting sentiment further, authorities said Indonesia's stock exchange would begin disclosing whether shareholders owning more than 1% of a listed company are controlling shareholders or affiliated with them, as part of efforts to improve market transparency.

"Today's rally shows that valuations have become compelling. But for this to become a sustainable recovery rather than just a thin-liquidity rebound, Indonesia needs to turn cheap valuations into renewed foreign inflows," Fulvian said.

Indonesia's benchmark stock index .JKSE, one of the world's worst-performing markets this year, surged 3% and was headed for its best day since mid-October, while the rupiah firmed to 18,085 per US dollar.

In North Asia, AI-linked stocks came under pressure after Democrats secured commanding majorities in both the US Senate and House of Representatives, raising expectations of greater support for renewable energy and stricter oversight of data-centre development.

South Korea's chipmaker-heavy KOSPI .KS11 tumbled as much as 5%, while Taiwan's benchmark index .TWII shed 2%.

Elsewhere, oil prices declined as investors viewed the US election outcome as reducing the likelihood of a more confrontational US stance towards Iran. O/R

Lower oil prices supported oil-importing markets across emerging Asia, with the Philippines' benchmark index .PSI climbing 1.8% to a two-week high, while Malaysia .KLSE gained 1.2% to its highest since October 6 ahead of a widely expected hold by the central bank later in the day.

Singapore stocks .STI gained 0.5%, supported by a 3.7% rise in Singapore Airlines SIAL.SI, while DBS Group DBSM.SI fell 2.4% after Southeast Asia's largest lender warned of an uncertain outlook following a third-quarter profit miss linked to market volatility.

Meanwhile, Asian currencies advanced as the US dollar retreated, with the Malaysian ringgit gaining 0.4%, while the Philippine peso , Singapore dollar and Thai baht rose between 0.2% and 0.5%.

The South Korean won inched 0.2% lower. The Taiwan dollar fell to 32.950 per US dollar, its weakest level since early April 2025, with MUFG analysts attributing the currency's underperformance to sustained foreign selling of Taiwanese equities.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields at 7.740%

** Thailand central bank chief says 2% growth not enough

** BOJ debated need for more rate hikes, scope for faster moves, September minutes show