Winners in the Tech Lane Are Taiwan and Korea

Some Asian markets have managed to turn trade tension into opportunity, at least for now. Taiwan, with its heavy reliance on high-tech exports, has been one of the region's standout performers. Its stock market jumped over 13% in May as global demand for semiconductors and AI infrastructure picked up. Taiwanese firms saw a surge in export orders, especially in electronics, supported by early demand from global clients bracing for potential disruptions.

South Korea also enjoyed strong equity gains, with its KOSPI index rising by more than 5%. A strengthening Korean won and optimism around pre-election economic stimulus contributed to the upbeat mood. However, beneath the surface, there are signs of problems. Recent data showed industrial production falling for the first time in months in May, and the central bank slashed its growth forecast, blaming weak domestic demand and the lingering impact of U.S. tariffs on exports.

Source: CNN

Southeast Asia’s Mixed Fortunes

In Southeast Asia, market performance has varied sharply. Vietnam and Indonesia were among the few bright spots. Vietnam’s stock market surged nearly 9%, bouncing back from a steep drop in April on ongoing negotiations with the U.S. to reduce reciprocal tariffs that offered hope. Indonesia’s market also rallied, thanks to interest rate cuts by the central bank aimed at boosting consumption and investment.

Elsewhere in the region, the mood was more cautious. Thailand's stock index slid over 4% as investors worried about sluggish government spending and weak consumer sentiment. Malaysia also struggled, despite decent export numbers. Investors were concerned about inflation creeping up and the long-term impact of global trade fragmentation. Singapore, typically seen as a regional safe haven, posted only modest gains as it faced the risk of slipping into a technical recession.

China’s Balancing Act

China, still the region’s economic giant, finds itself in a complicated position. The temporary reduction in tariffs agreed with the U.S. was welcomed, but structural issues at home continue to weigh heavily. The government introduced another round of policy easing, cutting key interest rates and reserve requirements to stimulate growth. But with the property sector under tension and domestic consumption still low, the effectiveness of these measures remains unclear.

That said, China’s market sentiment has improved modestly. The stock market showed slight gains, and the authorities are focused on restoring investor confidence through both fiscal and monetary levers. Still, concerns persist that if trade tensions flare up again, China’s already fragile recovery could be derailed.

Uncertainty is the Only Certainty

What comes next for Asia depends heavily on the trajectory of U.S. trade policy. While President Trump’s administration has momentarily toned down its aggressive stance, there’s no guarantee this will last. Any new tariff shocks or abrupt policy shifts could spread across global supply chains, especially in Asia, where export-led growth is still crucial to many economies.

Moreover, lingering structural weaknesses such as overreliance on a few sectors, vulnerable currencies, and domestic political challenges mean that even countries currently performing well could find themselves exposed.