Sunday, May 22

Asia stocks gain on China stimulus hopes; Fed in focus


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Emerging Asia’s stocks and currencies

rose on Wednesday, driven by hopes of more economic stimulus in

China, with investors also focusing on Russian-Ukraine peace

talks and the US Federal Reserve.

Equities in China surged more than 3% and the yuan

inched up 0.4% in its best session in over two

months, after Vice Premier Liu He indicated China plans to take

measures to boost the economy and would also announce policies

favorable to capital markets.

Stocks in Thailand climbed nearly 1%, while those in

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Singapore and South Korea gained over 1%.

Currencies also edged higher, with the Thai baht and

South Korean won clocking a 0.4% gain each.

The gains followed a relief rally on Wall Street overnight,

driven by hopes of a resolution to the conflict in Ukraine.

Ukrainian President Volodymyr Zelenskiy said on Wednesday peace

talks with Russia were sounding more realistic but more time was

needed.

Moves in Asia were still cautious ahead of a closely watched

meeting of the Fed later in the day. Markets have already priced

in a 25 basis points rate hike and will also look for further

policy cues in light of surging inflation and volatile commodity

prices following Russia’s invasion of Ukraine.

“The bigger question is whether one should expect a

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carefully hawkish Fed or an aggressively hawkish Fed in

tonight’s meeting,” Bank of Singapore currency analyst Moh Siong

Sim said.

“A hawkish tone is likely to keep the dollar strong against

the currencies of developed markets and markets will also look

out for whether the Fed keeps the door open for a 50 basis

points hike further down the road,” the analyst said.

Regional markets also steadied on China cues, including a

drop in COVID-19 cases, with shares in Indonesia last up

0.8%, after climbing nearly 1% earlier, and the rupiah up

to 0.2%.

Indonesia’s finance minister said the economy was resilient

in the face of increased volatility due to the war in Ukraine

and vowed to protect people from an “extreme” rise in food

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prices.

Bonds in the region were under pressure, having taken a

beating last week when surging commodity prices raised inflation

risks, with yields on high-returning Indonesian benchmark bonds

rising 32 basis points to 6.766%.

HIGHLIGHTS:

** Top gainers on the Singapore STI include United

Overseas Bank Ltd up 3.5% and Yangzijiang Shipbuilding

Holdings Ltd up 2.29%

** Top gainers on the Jakarta stock index include

Victoria Investama Tbk PT up 25.48% and Tanah Laut Tbk

PT up 23.42%

Asia stock indexes and currencies

at 0732 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.03 -2.74 <.n2>

China EC>

India +0.43 -2.56 <.ns ei>

Indonesi +0.12 -0.41 <.jk a se>

Malaysia +0.18 -0.80 <.kl se>

Philippi +0.15 -2.37 <.ps nes i>

S.Korea 11>

Singapore +0.27 -0.94 <.st e i>

Taiwan -0.01 -3.28 <.tw ii>

Thailand +0.39 +0.03 <.se ti>

(Reporting by Riya Sharma; Editing by Anil D’Silva)

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