Monday, January 24, 2022

Emerging Markets – Most Asian currencies and stocks will rise as Fed rate forecasts remain unchanged.

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    * U.S. CPI at 39-year high but in line with expectations
    * Higher Brent prices underpin gains in ringgit
    * Chinese shares extend loses on continued rise in COVID-19
cases

    By Archishma Iyer
    Jan 13 () - Emerging Asia's currencies and stocks
broadly gained on Thursday as the safe-haven dollar slumped to a
two-month low after U.S. inflation data met market expectations
and was deemed unlikely to change the Federal Reserve's policy
tightening timeline.
    The Thai baht, South Korea's won and the
Indonesian rupiah rose 0.1% to 0.3%, while equities in
the Philippines, Taiwan and Kuala Lumpur
added between 0.2% and 0.8%.
    Data overnight showed that U.S. consumer prices rose at
their fastest rate in nearly 40 years in December, but were not
far off from expectations.
    This was unlikely to temper the Fed's plan as it has already
flagged higher rates this year, with markets pricing in three
hikes in 2022.
    "As the roadmap of tightening gets clear, some traders may
look for an exit and profit taking opportunities," said Margaret
Yang, a strategist at DailyFX, referring to the weakness in the
greenback.
     "A soft U.S. dollar is generally positive for stocks,
commodities and emerging market assets."
    Malaysia's ringgit rose for a fifth straight day, buoyed by
recent gains in oil prices, which have in turn weighed on the
Philippine peso, down 0.4% on the day.
    Malaysia is the only net oil exporter in Southeast Asia,
while the Philippines is an oil importing nation with a huge
trade deficit.
    The South Korean won edged up 0.2% ahead of a
central bank meeting on Friday, where a 25 basis point rate hike
is expected. The currency is up more than one percent this week.
    After this week's expected rate increase, HSBC analysts
expect one last rate hike in the fourth quarter.
    "While the decision (this Friday) is unlikely to be
unanimous, the ongoing normalisation reflects the central bank's
commitment to curb financial stability risks and secure policy
room when it can." 
    South Korean shares fell 0.2% on selling from retail
investors ahead of the long-awaited public subscription for
battery maker LG Energy Solution's $10.7 billion IPO.  
    Among other stocks, Singapore's Straits Times Index,
was headed towards a sixth day of gains, while Manila shares
scaled a two-week high, jumping almost 1%.
    China's benchmark stock index was down 0.3%, hurt by
a surge in COVID-19 cases, which has led to restrictions in the
run-up to the Winter Olympics in Beijing.
    
    HIGHLIGHTS
            
    ** Indonesian 3-year benchmark yields are down 15.5 basis
points at 4.442%
    ** Singapore's 10-year benchmark yield is down 1.5 basis
points at 1.795%​​
    ** In the Philippines, top index gainers are AC Energy Corp
, up 5.67%, and Robinsons Retail Holdings Inc
, up 3.08% 
    
  Asia stock indexes and currencies at                                                          
 0849 GMT                                                                         
 COUNTRY        FX RIC        FX DAILY %    FX YTD %      INDEX   STOCKS DAILY %    STOCKS YTD %
 Japan                             +0.03       +0.43                       -0.96           -1.05
 China                             -0.04       -0.10                       -0.31           -1.47
 India                             +0.00       +0.57                        0.26            5.22
 Indonesia                         +0.14       -0.31                       -0.21            0.78
 Malaysia                          +0.17       -0.31                        0.32            0.05
 Philippines                       -0.43       -0.41                        0.80            2.10
 S.Korea                           +0.15       +0.01                       -0.18           -0.35
 Singapore                         -0.07       +0.19                        0.02            4.23
 Taiwan                            +0.02       +0.10                        0.19            1.05
 Thailand                          +0.33       +0.45                        0.06            1.32
 

    
 (Reporting by Archishma Iyer; Editing by Ana Nicolaci da Costa)
  

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