Spillover

• South Korea's Kospi index experienced a sharp crash, sparking concerns about potential global market contagion and spillover effects. • Financial experts suggest the impact on Indian markets will be minimal, noting that India is less at risk compared to other Asian economies. • A key reason for this resilience is the divergent performance in 2026, where markets in Korea and Taiwan soared while the Nifty fell, leaving Indian valuations less stretched.

• Experts and policymakers at a Nikkei conference in Tokyo warned that the closure of the Strait of Hormuz is triggering an energy crisis with wide-reaching economic spillover effects. • The Malaysian central bank Governor highlighted that these disruptions are negatively impacting industrial inputs, logistics, food prices, and the tourism sector across Asia. • The regional outlook is further complicated by the rise of AI-driven disinformation, which threatens to destabilize markets and political stability.