EMERGING MARKETS-AI buzz, Fed cut bets drive weekly gains across Asian equities

* S. Korean stocks top weekly gainer * Taiwan equities set to rise for sixth week * Asia FX range bound By Rishav Chatterjee Oct 3 (Reuters) – Taiwan stocks scaled fresh peaks on Friday, capping a week in which most emerging Asian markets notched gains as investors shrugged off U.S. government shutdown fears and leaned into bets on a near-term Federal Reserve rate cut. The MSCI EM Asia Index eased slightly on the day but remained on track for a weekly rise of 3.8%, set for its biggest weekly increase since September 12. A similar gauge, the MSCI Asia-Pacific index touched a record high and was set to advance 3.5% for the week. Trading was muted on Friday, but regional stocks wrapped up a strong week of risk appetite, lifted by upbeat local headlines and renewed enthusiasm around artificial intelligence. Emerging-market equities are still trading at a discount to developed peers, at 12.4 times forward earnings — close to their 25-year average, said Charu Chanana, chief investment strategist at Saxo. With their share of global assets under management slipping to 5% from 8% in 2017, the asset class remains under-owned and could gain if investors rotate out of recent winners into overlooked markets, she added. Taiwan’s benchmark climbed more than 1.3%, rising to a record for a second day. The index is on track for its sixth weekly gain, a run last seen in early 2024, powered by surging demand for AI-linked semiconductor stocks. South Korea's Kospi was closed on Friday, but was up 4.8% for the week as of Thursday. Philippine and Indonesian shares rose 0.3% each, while Malaysia slipped modestly but was still set to end the week in positive territory. Manila equities were on course to rise 0.5% for the week. "Emerging markets are enjoying a structural and cyclical tailwind, with earnings momentum and sector leadership in their favor. But investors should remain alert to macro headwinds such as tariffs and dollar swings that could test EM resilience into year-end," added Chanana. Trading in Asian currencies remained tepid on the day as the dollar gained some momentum and traders expressed some caution while assessing the impact of the U.S. government shutdown. The dollar index, which measures the greenback against a basket of currencies, fell most days this week and was on track for a weekly drop of 0.3%. In emerging Asia, the Indonesian rupiah and Malaysian ringgit edged down about 0.2% while the Philippine peso gained 0.2%. The Taiwan dollar and Thai baht were flat while Singapore's currency was down 0.1%. HIGHLIGHTS: ** Indonesian 10-year benchmark flat at 6.334% ** Philippines ends quake rescue efforts, priority now on helping 20,000 displaced Asia stock indexes and currencies at 0406 GMT COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS % DAILY YTD % % Japan -0.23 +6.51 1.50 16.04 China India -0.07 -3.54 -0.16 4.87 Indonesi -0.12 -3.07 0.28 14.32 a Malaysia -0.21 +6.08 -0.11 -0.38 Philippi +0.20 +0.26 0.28 -7.23 nes S.Korea Singapor -0.05 +5.90 0.21 16.29 e Taiwan +0.05 +7.83 0.86 15.50 Thailand +0.03 +5.78 0.37 -7.66 (Reporting by Rishav Chatterjee in Bengaluru; Editing by Christian Schmollinger)

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