EMERGING MARKETS-Indonesian stocks bounce off six-year low; Taiwan dollar depreciates

By Sneha Kumar

Oct 20 (Reuters) - Indonesia's stock market rose on Tuesday, off a six-year closing low hit after index compiler MSCI warned of a classification downgrade last week, while the Taiwan dollar drifted around its lowest point in 18 months.

The Jakarta Composite Index .JKSE rose 3.1% as investors focused on Indonesia's new measures to curb the selloff. MSCI warned of a downgrade to "standalone" status from "emerging market", which could trigger a selloff by passive funds that track global indexes.

The rebound was a bright spot against a broader market gloom, with MSCI's gauge of emerging Asia equities .MIMS00000PUS down 1.4%, weighed by a 3.7% decline in heavyweight South Korean equities .KS11.

The tech-heavy KOSPI slipped for the fourth consecutive session as investors dumped chipmakers on concerns surrounding heavy global investments in AI without clear signs of returns.

Samsung Electronics 005930.KS fell 3%, while SK Hynix 000660.KS lost 4.2%.

The pair of bellwethers have had a rough month, tumbling about 20% and 30%, respectively, while their combined weight has shrunk to less than half of the benchmark index for the first time since April.

Thailand shares .SETI dipped 0.5%, while the banking sector led the Singapore market .STI 0.2% down.

In Taipei, shares .TWII shed 1.1% with a 0.6% drop in TSMC 2330.TW. Taiwan dollar weakened to 32.651 per dollar. The currency has lost almost 2% in the last four sessions.

"For TWD, the pressure is coming more from capital outflows than from the US dollar itself," said Dilin Wu, research strategist at Pepperstone.

"Foreign equity selling creates demand for US dollars, putting the Taiwan dollar under pressure. In other words, even a steady US dollar won’t offer much relief if foreign investors keep pulling money out of Taiwan."

Foreign investors have pulled money out of Taiwanese equities at a record pace this year, and elevated oil prices have weighed on the oil-import-dependent economy.

https://www.reuters.com/graphics/EMERGING-MARKETS/TAIWAN/byvrabdzqpe/chart.png

INDONESIAN TRADERS HUNT BARGAINS

Indonesia's stock exchange on Monday excluded stocks with highly concentrated shareholding from its benchmark index and halved the daily down limit on stock prices after equities fell nearly 15% over the previous two sessions following MSCI's warning.

"Some bargain hunting is likely after the sharp selloff over the past two sessions," said Lukman Leong, chief analyst at brokerage Doo Financial Futures, adding that the market may also be reacting positively to efforts to address MSCI's concerns.

"I would view this as a short-term improvement in sentiment rather than a sign that the outlook has fundamentally improved."

The rupiah appreciated marginally to 17,980 a dollar, snapping a four-day losing streak. Bank Indonesia is narrowly expected to hold interest rates on Wednesday despite market selloff, according to a Reuters poll.

Traders will also be watching monetary policy decisions from the Bank of Korea and the Philippine central bank on Thursday.

HIGHLIGHTS:

** Philippine central bank to raise rates to 5.25% on October 22, hike again in December - Reuters Poll

** South Korea central bank to hold rates on October 22, hike in November - Reuters Poll

** Yuan hits fresh high since 2022 on export growth, stronger guidance