Tech Selloff Weighs on Asian Markets; Indonesia Slides After Moody’s Outlook Cut
By Cygnus | 06 Feb 2026
Summary
A retreat from technology stocks dragged Asian markets lower on Friday, while Indonesian assets faced a major rout after Moody’s lowered the country’s credit rating outlook to “Negative.” The move, which follows transparency concerns flagged by MSCI, has amplified fears regarding fiscal discipline and central bank independence in Southeast Asia’s largest economy.
SINGAPORE/JAKARTA, Feb 6 — A wave of risk-aversion swept through Asian bourses on Friday, as the tech-led decline on Wall Street crossed the Pacific, hitting semiconductor hubs like South Korea particularly hard. The MSCI Emerging Asia index fell 0.6% on the day, capping its worst weekly performance since late 2025.
South Korea: Tech Pullback Breaks Winning Streak
South Korean equities were among the regional laggards as investors pulled back from high-flying AI and hardware names. The KOSPI index fell 1.4% to 5,089.14, breaking a six-week winning streak.
The selloff was exacerbated by news from the U.S. that Anthropic has launched a legal-focused AI tool, sparking fresh concerns about the displacement of traditional software services—a sector where South Korean and Indian firms have significant exposure. Samsung Electronics and SK Hynix both ended the session slightly lower as foreign investors locked in gains following a year-long rally.
Indonesia: A “Warning Shot” from Moody’s
The most dramatic moves occurred in Jakarta. The Jakarta Composite Index (JCI) tumbled 2.6% to 7,894 points, while the rupiah weakened to 16,888 per dollar.
The trigger was Moody’s Investors Service changing Indonesia’s sovereign credit rating outlook from “Stable” to “Negative.” The agency cited:
- Reduced Predictability: Concerns over policy coherence under President Prabowo Subianto.
- Fiscal Risk: A widening deficit driven by ambitious social programs.
- Governance Issues: Following a warning from MSCI regarding transparency in Indonesian securities, which recently triggered an $80 billion market rout.
“The Moody’s outlook downgrade is a warning shot,” noted economists at OCBC. “It reflects a growing disconnect between the government’s 8% growth target and the fiscal reality on the ground.”
Mixed Regional Performance
While North Asia and Indonesia struggled, other parts of the region showed resilience:
- Japan: The Nikkei 225 managed a 0.8% gain, recovering from earlier losses as investors positioned ahead of the February 8 snap election, where Prime Minister Sanae Takaichi is expected to seek a stronger mandate.
- Thailand: The SET index rose 0.5% ahead of its own general election this Sunday, with investors optimistic about potential stimulus from the incoming administration.
- India: The Sensex remained relatively flat, trading 0.1% lower as it continues to digest the impact of the Feb 1 Union Budget and the recent STT hikes.
Why This Matters
- Contagion Risk: The Moody’s move on Indonesia could prompt other rating agencies, like S&P or Fitch, to follow suit if fiscal transparency does not improve by May.
- Tech Rotation: The shift out of Asian tech suggests that the “AI-at-any-price” phase of the market cycle is maturing, with investors now demanding clear ROI from hardware investments.
FAQs
Q1. Why are Asian tech stocks falling?
A combination of overstretched valuations, weakness in U.S. tech giants (like Amazon and Intel), and new concerns that AI tools may disrupt traditional software services provided by Asian firms.
Q2. What did Moody’s change about Indonesia?
Moody’s cut the credit rating outlook from Stable to Negative (while affirming the Baa2 rating), citing risks to fiscal effectiveness and policy predictability.
Q3. Is the Indonesia selloff related to the “Sumatra Disaster”?
Indirectly. While the disaster slowed Q4 GDP growth (5.11% vs a 5.2% target), the primary market driver is investor anxiety over governance and transparency issues flagged by MSCI.
Q4. What is the significance of the upcoming elections?
Elections in Japan (Feb 8) and Thailand (Feb 8) could lead to significant shifts in fiscal policy. In Japan, Prime Minister Takaichi is pushing for a record ¥122.3 trillion budget, which could impact the Yen’s strength.
Q5. How is the Indian market faring amid this regional volatility?
India is showing relative stability. Unlike Indonesia or South Korea, India’s post-budget fiscal path is seen as more predictable, although domestic liquidity remains a concern due to recent tax changes on derivatives.
