* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA
* Further equity market turmoil expected if yields rise more
-OCBC
* India's 10-year bond yield at highest since May 2020
* Malaysian 10-year bond yields hold above 3% mark
By Rashmi Ashok
Feb 26 (Reuters) - Asian equities dropped further and bond
yields rose on Friday after U.S. Treasury yields jumped, as
prospects for higher inflation and economic growth increased,
making investors doubt that central banks would retain ultra-low
interest rates for a longer period.
Overnight, the benchmark 10-year U.S. yield US10YT=RR
touched its highest in a year at 1.614%, causing a sell-off in
U.S. equities.
"The bond market is signalling disbelief that the Fed could
continue keeping rates at such low levels in the face of a
recovering economy and rising commodity costs," analysts at OCBC
wrote in a note.
They warned that further turmoil in equity markets was
expected if bond yields continued rising as investors looked to
rebalance their portfolios.
Rising bond yields threaten the allure of stocks' dividend
yield, while companies also face a higher debt-servicing burden
because of steeper borrowing costs, making investing in the
relatively riskier stocks less attractive overall.
India's 10-year bond yield IN10YT=RR climbed 6 basis
points to its highest since early May last year at 6.242%, while
Malaysian yields MY10YT=RR surged to 3.054%, hitting their
highest since July 1, 2020.
Indonesian bonds ID10YT=RR also succumbed, with yields
spiking almost 8 basis points to 6.617%. Yields had initially
held steady after the country's finance minister said on
Wednesday 2021 financing plans might be scaled back.
Equity markets in South Korea .KS11 and Taiwan .TWII ,
whose technology stocks have come under added pressure amid the
spike in global bond yields due to fears they may be overvalued,
bore the brunt of the sell-off, falling 3.3% and 2.9%,
respectively.
Philippine stocks .PSI and the peso PHP= were the sole
gainers in the region as trade resumed after a local holiday on
Thursday. The rise came after a subdued performance through the
week when regional stocks had seen bigger gains.
Malaysian stocks .KLSE also saw relatively thinner losses,
after data showed exports rose 6.6% in January, while imports
slowed slightly.
The growing view that ultra-low interest rates may be raised
sooner than expected supported the dollar =USD , which put
pressure on most Asian currencies.
The South Korean won KRW=KFTC slipped as much as 1.5% to a
three-week low, while the Indonesian rupiah IDR= fell 0.9% to
a more than nine-week low of 14,201 per dollar.
The Indian rupee INR=IN fell nearly 1% against the dollar.
The currency was set to end the week 0.5% weaker, after
six-consecutive weeks of strengthening amid improved economic
outlook and dollar weakness.
Thai markets were shut for a local holiday.
HIGHLIGHTS:
** In the Philippines, top index gainers are Bank of the
Philippine Islands BPI.PS , up 5.83%, and Robinsons Retail
Holdings Inc RRHI.PS , up 4.72%
** Top losers on the Singapore STI .STI include: Venture
Corporation Ltd VENM.SI , down 2.44%, and Dairy Farm
International Holdings Ltd DAIR.SI , down 2.24%
** Indonesian 3-year benchmark yields are up 12.3 basis
points at 5.419%
Asia stock indexes and
currencies at 0713 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCK
DAILY YTD % X DAILY S YTD
% % %
Japan JPY= +0.05 -2.75 <.N2 -3.99 5.55
25>
China
India INR=IN -0.94 -0.05 <.NS -3.17 4.55
EI>
Indones IDR= -0.85 -1.13 <.JK -1.24 3.89
ia SE>
Malaysi MYR= -0.23 -0.68 <.KL -0.08 -2.88
a SE>
Philipp PHP= +0.72 -1.21 <.PS 0.58 -4.83
ines I>
S.Korea
Singapo SGD= -0.28 -0.60 <.ST -0.95 3.57
re I>
Taiwan TWD=TP +1.49 +2.30 <.TW -3.03 8.29
II>