EMERGING MARKETS-South Korea, Taiwan drag Asian equities lower on renewed AI woes

Updates for afternoon trade

By John Biju

Dec 18 (Reuters) - South Korean and Taiwan equities led Asian stock markets lower on Thursday, as concerns over artificial intelligence-related investments and profits drove investors away from tech stocks.

An MSCI index of emerging Asian equities .MIMS00000PUS, in which South Korea and Taiwan make up 40% of the index, declined 0.3% to hover near a three-week low hit on Tuesday.

Stocks in South Korea .KS11 closed 1.5% lower as concerns over frothy AI valuations weighed. Chipmaker Samsung Electronics 005930.KS fell 0.3%, while battery maker LG Energy Solution 373220.KS tumbled 8.9%.

The South Korean won KRW=KFTC, which has been hovering around 16-year lows, weakened 0.3%, prompting officials to ratchet up warnings against speculative moves.

Equities in Taiwan .TWII fell as much as 0.6% before closing 0.2% lower, ahead of a central bank decision at 0800 GMT.

Economists surveyed by Reuters expect the central bank to maintain its policy stance citing the strong performance of the economy, which is booming on AI demand.

In Southeast Asia, equities in the Philippines .PSI declined 0.8%, while those in Singapore .STI retreated 0.2%.

"Although emerging market equities are, in some places, very heavily exposed to the AI boom, we think they would in aggregate hold up better than those in the U.S. if that boom continued to unwind," Thomas Mathews, head of markets, Asia Pacific at Capital Economics, said in a note.

However, he said if concerns about AI became a panic, Asian equities would probably still be hit hard, even where AI exposure was not high.

Indonesian equities .JKSE slipped 0.4%, while the rupiah IDR= declined to its weakest point since November 21. The rupiah has fallen more than 3% this year, making it one of the worst performers in the region.

Bank Indonesia kept its policy rate unchanged on Wednesday for a third straight meeting, focusing on maintaining the stability of the currency.

"Policymakers continue to count on transmission to ease financial conditions," said Radhika Rao, DBS Bank senior economist.

"While the central bank is likely to retain its dovish language, we expect ammunition to be preserved in light of firmer momentum in domestic activity towards late 2025."

In Thailand, equities .SETI fell for a third session, while the baht THB=TH seemed to be facing resistance around 31.46 per dollar after strengthening more than 3% since mid-November.

The Bank of Thailand cut interest rates by 25 basis points on Wednesday to support a slowing economy hit by multiple challenges including a strong baht THB=TH.

On Thursday, the central bank chief said they were proposing the finance ministry to control gold trading after a surge in transactions helped drive up the value of the baht and added that monetary policy could be further eased if needed.

HIGHLIGHTS:

** Japan, US discuss potential projects for $550 billion US-bound investment package

** US approves $11.1 billion arms package for Taiwan, largest ever

** Japan's premier says country must pursue proactive spending for growth

** India's parliament approves bill to raise foreign direct investment in insurance to 100%

(Reporting by John Biju in Bengaluru; Editing by Subhranshu Sahu)

((John.Biju@thomsonreuters.com;))