Malaysia stocks slump on COVID-19 curbs, Asian currencies range-bound

Malaysia led losses across Southeast Asian stock markets on Tuesday after a state of emergency was declared in the country to curb the spread of COVID-19, with bank stocks leading the decline.

Malaysia's main stock index declined as much as 1.6%, falling sharply for a second straight session, while other Asian stock markets also tracked overnight losses on Wall Street. South Korean shares were down more than 1%.

Malaysia's King Al-Sultan Abdullah declared a nationwide state of emergency on Tuesday to curb the coronavirus, one day after the country's prime minister announced a 14-day lockdown in the capital and five states.

CGS-CIMB Securities expects a fortnight of restrictions will shave 0.7% off Malaysia's 2021 growth forecast, estimating daily economic losses of 750 million ringgit ($184.87 million).

"Given the risk that the MCO (movement control order) may be extended... additional policy support may be needed to support the economy," the brokerage said, adding the central bank may discuss a rate cut at its monetary policy meeting next week.

The ringgit weakened 0.2%, while other emerging currencies in Asia traded in tight ranges.

Indonesia's rupiah dipped 0.5% against the dollar, which tracked US Treasury yields higher. Ten-year US yields topped 1% last week for the first time since March.

The rupiah is generally favoured by foreign investors seeking to tap Indonesia's high-yielding debt.

TD Securities expects short-term pressure to continue on the rupiah as US yields rise and inflows into local bond markets temporarily ease.

The Taiwanese dollar, which tends to move in wider ranges, strengthened 1.8%. Taiwan's central bank has sent inspectors to domestic banks to investigate whether exporters are speculating in foreign currency as the Taiwan dollar soars against the US dollar, Reuters reported on Monday.