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Stocks and currencies in emerging Asian
markets struggled to find direction on Wednesday ahead of the
US Federal Reserve’s policy meeting outcome, where investors
will be looking for any hints of faster policy tightening.
The Fed is expected to update its monetary policy plan later
on Wednesday, with market participants awaiting clues on the
pace of interest rate hikes and a timeline for policy
normalization. (For the latest Reuters poll, see)
Equities in Manila and Seoul fell 0.5% and
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0.4%, respectively, while stocks in Singapore, Kuala Lumpur
Kuala Lumpur and Bangkok rose between 0.5% and 0.9%
after a volatile overnight session on Wall Street.
Balanced current accounts, largely lower inflationary
pressures and the stability provided by the resilient Chinese
yuan to regional currencies have ensured that most Asian central
banks have not been pressured to pursue interest rate hikes as
aggressively as their peers in Europe and Latin America.
However, Fed tightening is putting pressure on some central
banks in Asia to follow suit, potentially hurting their equity
markets, similar to what happened in 2013 when the US central
The bank began tapering its post financial crisis stimulus.
“The recent central bank actions in Asia suggest that they
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may want to prepare for a Fed that is more hawkish than
currently expected,” said Frances Cheung, rates strategist at
OCBC Bank.
“The pre-emptive tightening provides them with some
flexibility to quicken their own tightening paths if there is
any upside surprises from the Fed.”
On Tuesday, Singapore’s central bank tightened its monetary
policy settings in its first out-of-cycle move in seven years, a
day after the city-state reported core inflation at an
eight-year high.
The dollar index was flat at 95.948, while currencies
in Asia were largely subdued.
Malaysia’s ringgit, Indonesia’s rupiah and the
Singapore dollar all traded flat. Thailand’s baht
was an outlier, gaining 0.3%.
In Philippines, Market participants await the country’s
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fourth-quarter gross domestic product data on Thursday, with the
economy projected to have expanded at a slower pace of 6.0% from
a year earlier, based on the median estimate in a Reuters poll.
Financial markets in India are closed on Wednesday for a
holiday.
HIGHLIGHTS
** Singapore shares up 0.9%, on track for their best
session since Jan. 4
** Expected interest rate hikes by Fed may delay emerging
Asia’s economic recovery and keep pressure on policymakers to
guard against risk of capital outflows – senior IMF official
Asia stock indexes and currencies at 0630 GMT
COUNTRY FX RIC FX FX INDEX STOCK STOCK
DAILY YTD % SS YTD
%DAILY%
%
Japan -0.03 +1.04 -0.44 -6.18
China +0.06 +0.53 0.61 -5.10
Indonesia +0.01 -0.68 -0.19 -0.39
Malaysia -0.02 -0.60 0.65 -3.11
Philippines -0.13 -0.44 -0.47 1.84
S.Korea +0.08 -0.74 -0.41 -9.01
Singapore +0.04 +0.39 0.93 4.93
Taiwan -0.07 -0.17 -0.15 -2.99
Thailand +0.30 +1.34 0.47 -0.65
(Reporting by Harish Sridharan in Bengaluru; Editing by
Shailesh Kuber)
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