On one hand, surging to a new historical high, on the other hand, plunging more than 10%! AI, with its own power, is tearing apart the Asian stock market.

Asia's major markets are showing drastically different trends, as if they are in two parallel worlds. South Asia and Southeast Asia are affected by rising oil prices, resulting in pressure on trade balances. Stock markets in India, Indonesia, and the Philippines have seen consecutive declines. In contrast, the East Asian market is actively investing in chip and artificial intelligence (AI) companies, with stock indices in South Korea, China, and Taiwan repeatedly hitting new highs, almost ignoring the impact of the Middle East GEO Group Inc conflict. This stark differentiation reflects two completely different investment logics in the global market: funds are selling off economies impacted by high energy costs, while overlooking short-term GEO Group Inc risks, and continue to focus on future core growth tracks. With little progress in US-Iran negotiations and the unresolved control dispute in the Strait of Hormuz, the risk of long-term energy supply disruption continues to simmer, potentially widening the gap in market trends in various Asian regions. Strategist Marvin Chen points out that the significant lag in the technology industry in South Asia, lacking a core AI track, is the key reason for its market significantly falling behind East Asian technology-dominated economies. "While South Korea, China, and Taiwan have similar levels of energy imports dependence, South Asia faces structural development weaknesses and urgently needs to actively integrate into the regional technology supply chain to overcome developmental challenges." At the beginning of the Iran conflict in late February, Asian markets collectively declined as oil prices soared and severely impacted energy-importing economies. However, as the conflict prolonged, market risk aversion gradually subsided, and funds flowed back into the mainline market trends before the conflict, concentrating on investing in AI concept assets. Currently, the East Asian market has largely recovered from the declines following the conflict. The Taiwan Weighted Index has risen by nearly 10% since the conflict, leading the gains among major markets in Asia; the Korean Composite Index has risen by about 4%, while the Shanghai Shenzhen 300 Index and the Japanese Nikkei 225 Index have also steadily increased. In contrast, market performance in other regions remains weak. The Indian Nifty 50 Index has fallen by about 5%, the MSCI ASEAN Index has dropped by around 7%, and benchmark stock indices in the Philippines and Indonesia have both plunged by more than 10%. The resilience of the East Asian market is rooted in the region's core industrial advantages: leading local companies deeply integrated into the global semiconductor industry chain, which is a core cornerstone of the current AI industry boom. Leading companies such as Taiwan Semiconductor Manufacturing Co.,Ltd., Samsung Electronics, and SK Hynix have seen a surge in demand for orders, and in the short term, the industry's prosperity has been largely unaffected by the GEO Group Inc political turmoil, fully enjoying the benefits of the growth trend. In contrast, South Asia and Southeast Asia are deeply entangled in the high oil price dilemma: rising oil prices have pushed up inflation, eroded current account surpluses, and weakened local currencies, severely limiting policy control space. Due to a lack of technological industry empowerment and difficulties in attracting cross-border capital inflows, the market trends in this region remain subdued. The currency market also reflects the differentiation in stock markets: the New Taiwan Dollar exchange rate has shown relative stability, while the Indian Rupee and most Southeast Asian countries' currencies are under significant pressure, with depreciation pressure remaining high. Sonal Varma, Chief Economist for Nomura Holdings, Inc. Sponsored ADR for Asia Pacific (excluding Japan), pointed out that three core factors have led to the differentiation in Asian markets: first, India and Southeast Asia have a higher external energy dependence and weaker risk buffering capabilities, making them vulnerable to energy shocks; second, the fiscal fundamentals of East Asian economies are more stable; third, the strong wave of the AI industry is supporting East Asian economies and capital markets but is struggling to benefit South Asia and Southeast Asia. However, there are also localized differences within the regional differentiation. Malaysia, as a net oil exporter, has to some extent mitigated the impact of the energy crisis, with its currency performing significantly better than neighboring ASEAN countries. Singapore, relying on safe-haven fund inflows, leads Southeast Asia in the resilience of its bond market, foreign exchange market, and stock market. Although the Korean stock market has performed well, it is still hampered by energy shocks, with continued weakness in the bond market and exchange rate. To curb inflation and stabilize livelihoods, the South Korean government has introduced its first round of oil price ceiling policies in nearly thirty years, simultaneously expanding fuel tax reductions and increasing fiscal support measures to counteract the impact of rising energy prices. Varma revealed that Nomura is currently focusing on multiple regional differentiation trading strategies, including long positions on the Euro, short positions on the Indian Rupee, long positions on the Singapore Dollar, short positions on the Indonesian Rupiah, and interest rate-bearing positions in Thailand and South Korea. As the world's largest oil importer, China's resilience in resisting the impact of the current Iran GEO Group Inc conflict is particularly outstanding. The advantages of the domestic new energy industry are highlighted, with the rapid popularization of the new energy vehicle industry effectively countering the input pressure from rising fuel prices. Looking ahead, the AI trend market will face a key test. Christopher Wood, the global stock strategy head of Jefferies Financial Group Inc., mentioned in a research report that this week, global tech giants such as Meta and Microsoft Corporation will release financial reports, with the market focusing on corporate capital expenditure plans. The market currently questions whether the capital spending model for large-scale AI investments can be sustained in the long term based on enterprise cash flow. Gary Tan, portfolio manager at Allspring Global Investments, believes that as long as international oil prices remain high and capital continues to favor technology-driven economies with stronger risk resilience, the differentiation pattern in Asian markets will persist. Asia is currently at the core of the two major macro mainlines: one is the long-term industrial transformation driven by AI, and the other is the short-term macro pressure triggered by the conflicts related to GEO Group Inc.