On Friday, South Korean equities extended their decline as investors continued to withdraw from technology stocks. Meanwhile, Moody's downgrade of Indonesia's credit rating outlook delivered a fresh blow to Southeast Asia's largest economy, sending Indonesian shares down over 2%.

The MSCI Emerging Markets Asia Index fell 0.5%, pressured significantly by a 1.7% drop in South Korea's KOSPI. The broader index for Asian markets outside Japan approached a 2% decline at one point.

In Seoul, chipmakers Samsung Electronics and SK Hynix fell 1.2% and 0.2%, respectively, dragging the regional information technology sector down by approximately 2.4%.

This week, AI firm Anthropic introduced new legal tools for its Claude chatbot, sparking concerns about potential widespread disruption in the IT and software services sectors, causing ripples across global markets.

"With U.S. tech stocks showing weakness, market sentiment is easily transmitted to Asian tech sectors, especially after a significant rally that left positioning at elevated levels," said Xavier Wang, a market analyst at eToro. "The current market performance appears more like investors reducing risk and locking in profits rather than a broader breakdown in the tech theme."

In Southeast Asia, Indonesia's Jakarta Composite Index fell 2% in early trading, while the Indonesian rupiah weakened to 16,885 per U.S. dollar, its lowest level since January 22.

Investor confidence in Indonesia has been dampened by growing concerns over policy uncertainty under President Prabowo Subianto's administration, including worries about a widening fiscal deficit and central bank independence. Exchange data shows foreign investors have pulled $1 billion from Indonesian equities in 2025. The pace of outflows accelerated further since mid-last week, after MSCI warned it might downgrade Indonesian stocks to frontier market status, and Moody's cut the country's credit rating outlook on Thursday.

"In the short term, Indonesia's onshore financial markets may see immediate weakness following the outlook downgrade; subsequent domestic policy responses will be crucial," analysts at DBS Bank noted. "While the outlook change doesn't immediately alter rating-sensitive investment mandates, investor willingness to increase exposure to Indonesian assets may decline, with a preference shifting towards short-term bonds."

Markets in Malaysia, the Philippines, and Taiwan were largely flat. Singapore's Straits Times Index fell 0.7%, while Thailand's SET Index gained 0.5%.

In currency markets, the South Korean won hovered near 1,470.60 per U.S. dollar, a more than two-week low. The Thai baht appreciated by approximately 0.2%.

Thailand is set to hold a House of Representatives election on Sunday, the same day voting will take place for a snap election called by Japanese Prime Minister Sanae Takaichi. The ruling coalition in Japan is widely expected to win the election, which could reduce the likelihood of more substantial fiscal stimulus measures.