Tuesday, October 19

Asia FX dips on stronger dollar, S.Korea shares slide most


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Most emerging Asian currencies weakened on

Tuesday as the dollar rose ahead of a key US payrolls report

this week, while South Korean stocks slumped on the back of an

overnight selloff on tech-heavy Nasdaq.

South Korean equities ended at a nearly seven-month

low, tracking weakness on Wall Street, where investors dumped

big tech names as US Treasury yields rose amid Washington

wrangling over the debt ceiling.

Concerns that elevated inflation could bring forward the

timeline for Federal Reserve tapering have also recently

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supported bond yields.

Markets are also eyeing September employment data this

Friday for signals on the pace of the Fed’s tapering timeline.

A strong result could pave the way for the Fed to begin

reducing its $120 billion in monthly bond purchases in November,

the central bank indicated in its September meeting, which may

sap appetite for the region’s riskier assets.

“Barring a huge miss in the non-farm payrolls this Friday,

expect the market to continue buying into the hawkish Fed

storyline,” OCBC said, adding that this would support the

dollar.

The Philippine peso and South Korean won

firmed around 0.2% each, while most other currencies dipped

against the greenback.

OPEC+ also ignored calls from the United States and India to

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boost oil output as the global economy recovers, lifting crude

prices to their highest in at least three years and raising

further inflation concerns.

Inflation in the Philippines, meanwhile, eased in September

from a three-year peak, giving the central bank room to maintain

its policy support to help the Southeast Asian nation’s economy

recover from the pandemic.

Brokerage UOB expects the Philippine central bank to

maintain its accommodative monetary policy stance until

mid-2022, given the uneven recovery.

In Singapore, shares fell 1.4% after the previous

day’s rally. The city-state’s stock exchange operator

was the biggest drag, falling around 3% ahead of an annual

general meeting on Thursday, while real estate stocks also

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weighed.

Worries about debt defaults by Chinese property developers

also sapped investor sentiment amid fresh credit rating

downgrades and uncertainty about the fate of China Evergrande

Group as it scrambles to raise cash by selling assets.

Chinese markets are closed for a holiday until Thursday.

HIGHLIGHTS:

** Frasers Logistics & Commercial Trust and

Mapletree Logistics Trust are among the top losers in

Singapore

** Indonesian 10-year benchmark yields down 1.5 basis points

at 6.319%​​

** Australia’s central bank sticks with low rates, dodges

high house prices

Asia stock indexes and currencies at 0704 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC DAILY% YTD% DAILY% YTD%

Japan -0.31 -7.17 -2.19 1.38

China – +1.25 – 2.74

India -0.23 -1.90 0.06 26.61

Indonesia +0.06 -1.52 -0.88 5.15

Malaysia -0.16 -3.79 0.12 -6.33

Philippines +0.32 -5.19 0.29 -2.22

S.Korea +0.00 -8.62 -1.89 3.09

Singapore -0.11 -2.72 -0.80 7.77

Taiwan -0.10 +2.11 0.32 11.73

Thailand -0.03 -11.33 0.57 12.02

(Reporting by Nikhil Kurian Nainan in Bengaluru; editing by Ana

Nicolaci and Ramakrishnan M.)

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