Asian stocks fell on Friday, spooked by
a fresh COVID-19 alert in Shanghai and Beijing, while Indonesian
stocks took a hit after the world’s biggest palm oil exporter
raised its maximum palm oil export tax.
Sentiment in the region soured on news of renewed curbs in
China as new COVID cases emerged. Multiple districts in Beijing
are shutting down entertainment venues, while most citizens in
Shanghai are facing new rounds of mass testing to prevent a new
Investors were also cautious ahead of US inflation data
later in the day, which could guide the Federal Reserve’s policy
Jakarta stocks fell 1.5% and were on track for a
weekly fall after three consecutive weeks of gains.
Indonesia raised its maximum export tax for crude palm oil
by 44%, but reductions in another levy are expected to reduce
overall fees to send palm oil products overseas and encourage
Stocks in Seoul also dropped over 1% and were set to
close the week with their worst performance in nearly 5 months,
weighed by rising inflation worries and a truckers strike that
is threatening to severely curtail shipments of raw materials
for semiconductors and petrochemical products.
Benchmark indexes in Malaysia, Singapore,
Philippines, Taiwan and Thailand also
fell between 0.5% and 3%.
The US Labor Department’s Consumer Price index is due
later in the day and has kept market participants anxiously
waiting for confirmation that decades-high inflation reached its
summit in March and has started to ease.
“Peaking US inflation imaginably provides some relief from
fears of an inadvertent policy-induced hard-landing from Fed
oversteer,” Vishnu Varathan, head of economics and strategy at
Mizuho Bank wrote.
“But this may be insufficient to override capital outflow
risks associated with coincident out-run in EM Asia’s inflation
eroding EM Asia’s real returns in EM Asia.”
Market watchers still expect the Federal Reserve to raise
interest rates by 50 basis points next week, but a cooler
inflation reading could add to views it is likely to throttle
back tightening later in the year.
“Swings in USD, UST yields are to be expected if actual
reading surprises, but USD dips may still prove to be shallow
given FoMC next week and signs of incremental haven demand given
equity woes, growth concerns,” analysts at Maybank wrote in a
Currencies were, however, mixed across the region against a
The Thai baht weakened 0.4% and was set to lose
nearly 1% for the week, which saw a shift by the central bank to
a more hawkish footing stunning markets and appearing to finally
end policymakers’ tolerance for mounting price pressures, but a
range of risks are likely to keep any tightening gradually.
South Korean won weakened the most, falling 1%
and was on track to mark the biggest weekly fall in 10 months
after the country’s current account balance became a deficit in
April for the first time in two years on a reduced trade surplus
and annual dividend payment to stock investors.
** In Philippines, top index losers are Ayala Land Inc
down 5.36%; Bank of the Philippine Islands
down 5.32% ; SM Investments Corp down 4.87%
** Top losers on the Jakarta stock index include PT Trimuda
Nuansa Citra Tbk down 6.96%; Gaya Abadi Sempurna Tbk
PT down 6.91%
** Indonesian 10-year benchmark yields are up 4 basis points
COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS YTD %
DAILY % DAILY
Japan +0.40 -13.98 -1.49 -3.36
Indones +0.07 -2.06 -1.35 7.66
Malaysia -0.14 -5.32 -0.79 -4.45
Philipp +0.04 -3.68 -3.00 -7.96
Singapo +0.18 -2.27 -0.91 1.81
(Reporting by Indranil Sarkar in Bengaluru; Editing by Shailesh