Asian equities: South Korea, Taiwanese equities advance and India lead gains

BENGALURU: Emerging Asian equities steadied on Tuesday, following a bout of volatility sparked a day earlier by US President Donald Trump’s nomination for the Federal Reserve chair, while Indian shares were buoyed by a long-awaited US trade deal.

Currency markets held ground while the dollar index edged lower after a two-day advance.

The MSCI index of emerging market currencies was up 0.6 percent, while MSCI’s gauge of Asian emerging market equities advanced 3.1percent. A broader index of Asia-Pacific shares outside Japan was up 2.8percent.

Emerging Asian equities sold off sharply in the previous session, with South Korean and Indonesian benchmarks falling more than 5percent as investors reassessed their risk appetites amid concerns over the monetary policy stance of President Donald Trump’s pick, Kevin Warsh.

“Dip-buying in tech and export-linked stocks, alongside steadier global yields and improving regional sentiment, helped support the recovery from yesterday’s sell-off,” said Glenn Yin, director of research at ACCM.

South Korean stocks surged over 6.5percent, led by gains in heavyweight chipmakers. Samsung Electronics rose 11.4percent, while SK Hynix gained 9.3 percent.

Taiwanese equities followed suit, rising 1.8percent, with the world’s largest contract chipmaker TSMC up 2.6 percent.

Singapore shares rose to just shy of the 5,000 mark, advancing 1.1percent to a record high, supported by bank stocks including DBS Group and Oversea-Chinese Banking Corp which were up 0.9percent and 1.6percent, respectively.

“Investors are rotating into defensive, dividend-rich markets amid regional volatility. Strong bank earnings, a stabilising REIT sector and policy predictability continue to position Singapore as a preferred low-beta play in Asia,” Yin said.

Meanwhile, India’s equity benchmark jumped 3percent, while the rupee climbed 1.2 percent, after the Asian country finalised a trade deal with the US that slashed tariffs to 18percent, lifting expectations of renewed foreign inflows.

Indonesian stocks pared early losses to gain 1.8percent after a tumultuous week, during which an MSCI warning over transparency concerns triggered an USD80 billion rout and prompted the resignation of the country’s top financial regulators.

MSCI said it would not comment on individual discussions, a day after meeting Indonesian officials to address market transparency concerns.

“We currently sense a wait-and-see approach among foreign investors,” said Ari Jahja, head of Indonesia research at Macquarie Capital.

“Structural reforms, improved policy execution, and signs of macro uptick would be crucial to boost confidence,” Jahja said.