BENGALURU: Emerging Asian stocks rallied to their highest in more than six weeks on Wednesday as hopes for a resumption of US-Iran peace talks lifted investor appetite for risky assets, while Indonesia’s rupiah hit a fresh record low.
US President Donald Trump said talks with Iran could resume in Pakistan over the next two days after negotiations over the weekend collapsed and Washington imposed a blockade on Iranian ports.
Signs of diplomatic engagement calmed markets, sent oil prices firmly below USD100 a barrel, and pushed the MSCI gauge of EM Asia equities up more than 2 percent to its highest since March 2.
A broader gauge of global EM stocks advanced 1.7 percent, also scaling its highest since early March.
Glenn Yin, director of research at brokerage ACCM, said stocks in the region were benefiting from growing bets on a peace deal, as investors reassessed risks around a key global energy chokepoint.
Still, a geopolitical risk premium remains, Yin said.
South Korea’s KOSPI led the rally in the region, advancing as much as 3.6 percent to the highest since late February, while stocks in Taipei hit a record high of 37,064.16 points. Taiwan’s tech-heavy benchmark gauge has surged more than 10 percent over the last seven sessions.
Stocks in Singapore added as much as 0.6 percent, hitting their highest since February 23, a day after the local central bank unexpectedly tightened monetary policy.
Equities in Manila rose 1 percent while those in Malaysia shed 0.3 percent.
The US halting trade going in and out of Iran by sea put pressure on the net oil importers in emerging Asia.
Indonesia’s rupiah sank to a record low of 17,145 per US dollar with the currency down nearly 1 percent over the last five sessions.
The rupiah is “facing structural pressures with persistent outflow from Indonesian bonds and the strong greenback (being) the key culprits,” Yin said, as the US shutting down Iran’s maritime trade was “another straw on the already fragile rupiah.”
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