Chennai, March 13 (UNI) The decline in the equity markets in India and China owing to the US-Israel-Iran war is lower are compared to technology-led stock markets in South Korea and Taiwan, states Moody’s Analytics in a report.
The Middle East conflict has sent shockwaves through Asian equity markets, exposing uneven vulnerabilities across the region, with South Korea seeing the steepest selloff, the report notes.
The shock followed a strong, artificial intelligence (AI) driven rally that had left the technology-heavy markets of South Korea and Taiwan with elevated valuations, making them acutely exposed to a sudden shift in risk appetite, Moody’s Analytics said.
According to the report, developed Asian markets like South Korea and Taiwan are highly dependent on imported energy. The conflict-induced spike in oil prices increased inflation risks and policy uncertainty, triggering foreign investor outflows that compounded the selloff.
On the other hand, the declines in India and China were more modest and in line with normal market swings. Structural buffers, including a smaller share of energy imports in domestic consumption and lower foreign investor participation, helped shield their equity markets from sharper declines, Moody’s Analytics said.
As to the AI connection, the report notes that the conflict triggered macro and financial shifts that are weighing most heavily on the very economies where AI optimism had recently raised valuations to stretched levels.
While the initial shock may subside, market volatility looks set to stay elevated. Across most APAC markets, rolling 20-day realized volatility is near the upper end of historical ranges, similar to levels seen during previous major trade risk events.
