Ko, who was born in South Korea and began playing golf aged five in Auckland, was in the company of Tseng (five-under 68) and American Michelle Wie (74) at the Royal Canberra Golf Club as she opened up a one-shot advantage over the field.
"She still looks 15, I don't know how she hits the ball that well," Taiwan's Tseng said.
"I wasn't even that close to her when I was 15. It is very interesting to see her play, and I really enjoyed playing with her today too.
"I think she pushed me up a little bit too, at first she made birdie and I don't want to lose, I want to make birdie too... but at nine she was on fire and I dropped back, she was on fire."
Ko became the youngest winner of a women's European Tour event last Sunday. She was also the youngest winner of a professional event aged 14 in January 2012 and the youngest Ladies Professional Golf Association (LPGA) Tour winner in August.
"When you hit a good round it makes it better, but Yani and Michelle, we had a few good conversations so I think that made it more enjoyable," said Ko.