Asian equities pause in recent rally; the peso causes exchange losses



  • Chinese city of Xian enters 7th day lockdown
  • Philippine peso weakens for day three
  • Malaysian stocks set to post 5-day rally

December 29 (Reuters) – Most Asian stocks fell on Wednesday, catching their breath after a recent rally as investors took inspiration from a mixed Wall Street session overnight amid a lack of regional developments.

The tech-heavy South Korean stock exchange (.KS11) followed the weakness of the tech-heavy Nasdaq (.IXIC) to lead the decline with a decline of 1%, followed by Malaysia (.KSLE), the Philippines ( .PSI) and Jakarta stocks (. JKSE), all down after several days of gains.

A light data schedule for Asia this week, with only Chinese manufacturing data expected on Friday, will keep markets “at the mercy of headline volatility, a theme that dominated December,” said Jeffrey Halley, analyst at senior market, Asia-Pacific, OANDA.

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Volatility is common in late December, as fund managers prepare to close their books for the year and the holidays reduce trading volumes in some major markets.

Asian currencies also faced pressure from the greenback’s strength on safe-haven flows as risk sentiment weakened slightly.

The Philippine peso and Indonesian rupiah fell the most, 0.5% and 0.3% respectively, while the Malaysian ringgit and Singapore dollar fell 0.1% each.

The rupee was planning its worst session in almost two weeks. The currency had gained around one percent over the past fortnight and appeared to be on a technical corrective path.

Meanwhile, the peso’s losses have risen to 1.4% since December 16, when a powerful typhoon hit the Philippines, displacing more than 400,000 people and causing widespread economic damage. Read more

“We expect the peso’s underperformance this year to continue through the third quarter of 2022 … which is the result of the Philippines lagging behind in resuming immunization relative to the rest of Asia,” Bank of America analysts wrote in a note.

“Therefore, growth, inflation and the balance of payments could remain difficult in the new year, especially against a background of rising energy prices.”

Shanghai shares (.SSEC) fell 0.7%, as the Chinese yuan traded flat as the city of Xian, with a population of 13 million, entered its seventh day of lockdown for fight a COVID-19 epidemic. Read more

Malaysia’s benchmark fell 0.2% after rising 3.2% in the past five sessions. It is the only stock exchange in the region which should end the year in negative territory.


** The main losers in the Kuala Lumpur index are Sime Darby Plantation Bhd (SIPL.KL) and IOI Corp (IOIB.KL), while Top Glove Corp wins the most

** The Shenzhen Chinese Stock Exchange and the Singapore Stock Exchange (SGX) have committed to establishing a cross-border link for exchange-traded funds (ETFs) read more

** Indonesian 10-year benchmark yields up 1.2 basis points to 6.366%

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Reporting by Anushka Trivedi in Bangalore; edited by Richard Pullin

Our standards: Thomson Reuters Trust Principles.



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