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EMERGING MARKETS-South Korea, Taiwan stocks lead losses in Asia on inflation fears

Published 05/11/2021, 01:38 PM
Updated 05/11/2021, 01:40 PM
© Reuters.

© Reuters.

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA
* South Korean shares down 1.8%, eye worst day since March 9
* Malaysia imposes COVID-19 curbs as infections spike
* Philippines detects cases of Indian virus variant

By Rashmi Ashok
May 11 (Reuters) - Tech-heavy equities in South Korea and
Taiwan led losses in Asian markets on Tuesday as investors
worried over a potential spike in inflation, while rising
COVID-19 cases and curbs in other parts of the region further
dampened sentiment.
U.S. stocks toppled off record highs overnight as traders
fretted that strong demand amid tight supply of basic materials
could sharply accelerate consumer prices, with markets now on
edge ahead of U.S. inflation data due later on Wednesday.
Higher inflation could force the U.S. Federal Reserve to
raise interest rates sooner than planned, which could put Asia's
central banks in a tough spot, as ongoing COVID-19 outbreaks and
lockdowns make matching the rate-hike cycle difficult.
Shares in Seoul .KS11 slid 1.8% to be on track for their
worst session since March 9, while those in Taipei .TWII lost
3.3% to hit a one-week low. The won KRW=KFTC and Taiwan dollar
TWD=TP , both heavily reliant on exports, fell 0.5% and 0.2%,
respectively.
Malaysia's stocks .KLSE were off 0.6% and the ringgit
MYR= dipped 0.2%, after the country imposed a new nationwide
lockdown to halt a third wave of COVID-19 infections which is
putting a strain on its healthcare system. Data showed its economy contracted by a smaller than
expected margin in the first quarter, supported by exports, but
that did little to lift the mood as worries over the impact of
the latest lockdown weighed. "The tighter restrictions will cause a significant dent to
the economy in the current quarter, imparting a downside risk to
our 16.7% second-quarter GDP growth view, which mainly stems
from a huge 17% plunge a year ago rather than any underlying
recovery," analysts at ING wrote.
In Philippines, where partial lockdown measures were
recently tightened in April, authorities detected its first two
cases of a coronavirus variant initially identified in India,
which some preliminary studies have shown spreads more easily.
Data showed Philippines' gross domestic product (GDP) fell
4.2% in the March quarter from a year earlier, worse than the
median estimate of a 3.0% contraction in a Reuters poll, though
sequential output figures showed a recovery was underway .
The peso PHP= fell 0.2% while stocks in Manila .PSI were
marginally higher.
"The growth outlook for the Philippines remains relatively
downbeat... Although we continue to expect second-quarter GDP to
post growth on a year-on-year basis, we may have to trim our
expectations, especially if partial lockdowns are extended
through May," analysts at ING wrote.
The Bangko Sentral ng Pilipinas will hold a monetary policy
meeting on Wednesday, where it is largely expected to keep rates
unchanged at record lows, with comments on the impact of the
latest curbs keenly watched.

HIGHLIGHTS:
** Top losers on the Singapore STI .STI include:
Yangzijiang Shipbuilding Holdings Ltd YAZG.SI down 2.63% and
Ascendas Real Estate Investment Trust AEMN.SI down 2.33%
** Indonesian 10-year benchmark yields are down 0.3 basis
points to 6.401%​​ while 3-year benchmark yields are up 1.1
basis points to 5.032%​​
** Top losers on FTSE Bursa Malaysia Kl Index .KLSE
include Genting Malaysia GENM.KL down 2.82% and Sime Darby
Plantation SIPL.KL down 2.1%


Asia stock indexes and
currencies at 0511 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCK
DAILY YTD % X DAILY S YTD
% % %
Japan JPY= -0.02 -5.11 <.N2 -3.27 4.04
25>
China S> EC>
India INR=IN -0.15 -0.54 <.NS -0.71 6.11
EI>
Indones IDR= +0.00 -1.09 <.JK -0.92 -0.97
ia SE>
Malaysi MYR= -0.22 -2.28 <.KL -0.58 -3.22
a SE>
Philipp PHP= -0.17 +0.23 <.PS 0.15 -11.3
ines I> 9
S.Korea C> 11>
Singapo SGD= -0.09 -0.44 <.ST -0.71 11.11
re I>
Taiwan TWD=TP -0.19 +2.20 <.TW -3.69 12.67
II>
Thailan THB=TH +0.00 -3.57 <.SE -0.30 9.25
d TI>



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