Indonesia, Timor-Leste seek broader market access, business ties

Asian stocks experienced a rebound on Friday as investors purchased technology shares, following a sharp sell-off driven by concerns about debt financing for the AI boom and increased competition from China. South Korea's KOSPI climbed 2.1%, while Japan's Nikkei 225 rose 1.7%, recovering some losses from Thursday. The MSCI Asia Pacific index increased by 1.1%.

This rebound followed Thursday's nearly 8% drop in the KOSPI, which hit its lowest close since late July, prompting a circuit breaker due to heavy selling in memory-chip makers.

Indonesia's stocks, however, contradicted the regional recovery. The Jakarta Composite fell 10.8%, its steepest one-day decline since January 1998, after dropping more than 11% earlier. This was the sharpest decline since 1998 due to MSCI proposing reclassifying Indonesia from an emerging-market to a standalone-market status, citing persistent concerns over market transparency and functioning.

Despite this, Indonesia's stock exchange reported steps taken to improve transparency, and the CEO sought clarification from MSCI. The Jakarta Composite had already been the worst-performing index this year, down over 30%, with foreign investors selling $4.7 billion worth of shares.

South Korean memory-chip makers led the market recovery, with Samsung Electronics up 2.6% and SK Hynix gaining 0.8%. Japan's Kioxia advanced 3.8%, and Sony rose 1.9%. Taiwan's Largan fell 3.1%, while Foxconn rose 1.1%. The rebound followed a technology sell-off intensified by worries about the financial risks of the AI investment boom, especially the debt burden of cloud-computing company CoreWeave.

Its shares recovered some ground on Thursday after extending Wednesday's 15.5% slump, following reports that its bond yields had reached distressed-debt levels. Reports of CoreWeave's progress on a next-generation DRAM architecture, which could intensify competition with established manufacturers like SK Hynix and Samsung, also fueled a broader global sell-off in AI-linked stocks. CoreWeave's shares rebounded nearly 5% on Friday.

Hong Kong's Hang Seng gained 0.4%, China's CSI 300 rose 0.1%, and the Shanghai Composite added 0.2%. Taiwan's benchmark index increased by 0.7%, although Taiwan Semiconductor Manufacturing Co.'s shares fell 0.8% despite reporting record quarterly profits and an upbeat revenue outlook.