Malaysia stocks fall on virus worries; yuan at 3-year high


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Malaysian equities led emerging Asian

stock markets lower on Monday as rising coronavirus infections

and an imminent lockdown in the country dampened risk appetite,

while gains in China’s yuan benefitted some currencies.

The yuan hit its strongest since May 2018. The

currency has firmed more than 1.5% this month, driven by a slide

in the U.S. dollar, heavy foreign investment inflows into

China and reduced tourism-related outflows over the past couple

of months.

Prior to market open, China’s central bank lifted its

official yuan midpoint to a new three-year high against the

dollar.

“Yuan-related currencies are likely to be supported by a

firmer yuan as reflected in the moves in the likes of Taiwan

dollar and South Korean won today,” said Mitul Kotecha, Chief EM

Asia and Europe Strategist at TD Securities.

Taiwan and South Korea are also export-oriented economies

whose trade prospects are seen linked to China’s economic

fortunes.

Taiwan’s dollar and the South Korean won

appreciated as much as 0.6% and 0.4%, respectively, with the

former touching its firmest since April 1997.

However, the pace of the yuan’s rally has slowed after

regulators signaled concerns over strong one-way bets on the

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currency.

“While yuan is likely to remain firm amid strengthening bond

and equity inflow, we expect official resistance to appreciation

pressures to grow,” Kotecha said.

Equities in Kuala Lumpur slid as much as 1.6%,

marking their worst day in two months, as a new nationwide

lockdown from June threatened to disrupt the Southeast Asian

nation’s economic recovery.

The ringgit slipped as much as 0.3% and was on track

to lose more than a percent in May.

“The closure of everything other than essential economic and

service sectors will mean a significant hit to the economy in

the current quarter,” analysts at Dutch bank ING said in a note.

The Philippine bourse lost more than a percent and

the peso weakened 0.3%, though it was on track to

appreciate more than a percent in May.

The country’s central bank said it would maintain easy

monetary policy until there was a clear economic recovery, and

noted that “further adjustments” to policy by the second half of

2022 were possible.

Vietnamese stocks slipped from a record high hit

earlier in the session and gave up as much as 1%. They were

still on track to record a more than 6% gain for the month.

Meanwhile, investors in Asia will keep tabs on U.S. jobs

data later this week for signs of recovery in the labor market

and signals of tightening monetary policy from the Federal

Reserve.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields edge lower to 6.422%

** South Korean won on track to end May largely flat

** Indonesian rupiah set to gain more than a percent in May

Asia stock indexes and

currencies at 0421 GMT

COUNTRY FX RIC FX FX INDE STOCK STOCK

DAILY YTD X S S YTD

% % DAILY %

%

Japan +0.13 -5.8 <.n2>

China 3 EC>

India +0.00 +0.8 <.ns ei>

Indones -0.07 -1.7 <.jk ia se>

Malaysi -0.12 -2.8 <.kl a se>

Philipp -0.07 +0.6 <.ps ines i>

S.Korea 8 11>

Singapo -0.02 -0.1 <.st re i>

Taiwan +0.37 +2.9 <.tw ii>

Thailan +0.00 -4.1 <.se d ti>

(Reporting by Sameer Manekar in Bengaluru; Editing by

Jacqueline Wong)



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