SPY•HIGHLIGHTS:
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
July 28 (Reuters) - Emerging market stocks slid to a more than three-month low on Tuesday as a rout in Asian chipmakers revived concerns over valuations of AI-related stocks, while currencies were mixed against a steady dollar.
Asian semiconductor stocks tumbled as a threat of increasing competition from Chinese chipmakers and uncertainty on returns from lofty AI capex spending rattled investors.
MSCI's emerging markets equities index .MSCIEF fell 3.7% to its lowest level since April, with losses concentrated in Asia.
South Korea's KOSPI .KS11 tumbled 10.8%, heading for its steepest monthly drop since the Asian financial crisis in 1997, while Taiwan's tech-heavy benchmark .TWII fell 4.7% and Chinese equities .CSI300 slid 2.8%. The selloff comes ahead of earnings from tech giants in the U.S. such as Apple AAPL.O, Microsoft MSFT.O, Meta Platforms META.O, and Amazon AMZN.O later this week.
"The trend right now is going to be rather a further readjustment of the valuations rather than a quick rebound," said Ipek Ozkardeskaya, senior analyst at Swissquote.
"What's new is that their free cash flow levels are drying up faster than investors thought and we saw that last week with Alphabet".
Conversely, equities in emerging Europe gained, with Polish .WIG, Hungarian .BUX, and Romanian .BETI benchmarks up between 0.6% and 0.7%.
The MSCI gauge for emerging market currencies .MIEM00000CUS was muted against the U.S. dollar.
Investors are also looking at the U.S. Federal Reserve's policy meeting starting later in the day, with greater emphasis on signs of any hawkishness in the communication on Wednesday as the U.S.-Iran conflict hangs in the balance.
Oil prices extended declines after President Donald Trump said on Monday that Washington was having "good talks" with Tehran. O/R
Most Asian currencies were subdued against the U.S. dollar, with the Indonesian rupiah IDR= slipping 0.3%, after a similar sized move in the previous session, following the surprise resignation of the Southeast Asian nation's central bank governor.
Rating agency S&P said the resignation may contribute to greater uncertainty about Indonesia's monetary policy, while affirming its credit rating to 'BBB/A-2'.
Elsewhere, S&P also affirmed Sri Lanka's FX rating at "CCC+/C" with a "stable" outlook on Monday.
In emerging Europe, currencies traded lower against the euro, with the Hungarian forint EURHUF= slipping the most, down 0.7%. The currency has been the region's best performer this year.
South Africa's rand ZAR= and the Turkish lira TRYTOM=D3 were muted.
