Tech-led selloff drags Asian stocks; Indonesia tumbles on Moody's outlook cut

South Korean equities extended declines on Friday (Feb 6) as investors continue to retreat from tech stocks, while Indonesian shares fell over 2 per cent after Moody's lowered the country's credit rating outlook, the latest blow to Southeast Asia's largest economy.

The MSCI gauge of emerging Asian equities slipped 0.5 per cent, pressured by a 1.7 per cent drop in South Korea's KOSPI index, while a broader gauge of Asian equities excluding Japan fell as much as nearly 2 per cent.

In Seoul, chipmakers Samsung Electronics and SK Hynix fell 1.2 per cent and 0.2 per cent, respectively, sending the regional information technology gauge about 2.4 per cent lower.

Markets were jolted this week after AI firm Anthropic unveiled a new legal tool for its Claude chatbot, raising worries over broader disruption to information technology and software service sector. 

"With US tech wobbling, sentiment tend to trickle over to Asian tech as well, particularly after a strong run that left positioning looking stretched," said Zavier Wong, market analyst at eToro.

"What we're seeing now feels more like investors de-risking and locking in gains rather than a sign that the broader tech theme is breaking down."

In Southeast Asia, Indonesia's Jakarta Composite Index dropped 2 per cent in early trade and the rupiah weakened to 16,885 per US dollar, its lowest point since January 22.

Investor confidence in Indonesia has taken a hit due to growing concerns around policy uncertainty under President Prabowo Subianto, including a widening fiscal deficit and central bank independence.

Foreign investors pulled $1 billion from equities in 2025, according to exchange data. Outflows have accelerated since mid-last week after MSCI warned of a potential downgrade to frontier-market status and Moody's downgraded the country's credit rating outlook on Thursday.

"In the near-term, onshore financial markets are likely to witness knee-jerk weakness due to the outlook change, with much onus on the domestic policy response thereafter," DBS analysts wrote.

"An outlook change doesn't carry immediate changes in rating-sensitive investment mandates, although there might be lower appetite to build additional exposure, besides a higher preference for shorter-tenor papers."

Stocks in Malaysia, the Philippines and Taiwan were largely unchanged, while Singapore shares dropped 0.7 per cent and Thailand's SET Index rose 0.5 per cent.

Among currencies, the South Korean won hovered around 1,470.60 a dollar, its weakest level in more than two weeks, while the Thai baht appreciated around 0.2 per cent.

Thailand is set to hold a general election on Sunday, the same day Japan votes in a snap election called by Prime Minister Sanae Takaichi. A win by Japan's ruling coalition, as widely expected, could reduce the likelihood of a larger fiscal stimulus.

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