Indonesia, Philippine shares climb as bond markets calm

Asia's emerging stock markets rose on Monday, led by a near 1% rise in Indonesia and the Philippines, as bond markets ended last week on a calmer note and regional manufacturing activity indicated that a gradual recovery was still on track.

Singapore stocks also climbed 0.9% as a wild ride last week saw US 10-year bond yields peak at 1.61% before ending the week at 1.41% and further dipping on Monday to 1.40%, easing pressure on regional debt markets and equity valuations.

"This is, for now, likely to be a modest wobble," analysts at HSBC wrote in a note, adding that "as long as Asian earnings remain strong and bond yields remain low, the outlook remains positive."

A steady recovery in the manufacturing sector has raised hopes of improvement from the COVID-19 shock although a slowdown in the region's largest market has raised some worry.

China's factory activity grew at the slowest pace in nine months in February, while Japan figures showed growth at the fastest pace in over two years and Indonesia and the Philippines also stayed in expansion territory.

"The big picture, supported by the latest figures, is that China's growth remains fairly robust," Capital Economics said after the China data, which was hit by a flare-up in COVID-19 cases.

Indonesia's rupiah, which backs some of the highest debt yields in emerging markets, dipped 0.4% to its lowest level since early November. Yields on its benchmark 10-year notes eased off the day's high to rise 6.5 basis points to 6.66%.

Barclays in a note said dollar demand, including for hedging, "is likely to remain elevated as market participants reduce risk," noting foreign investors sold 13.5 trillion rupiah worth of bonds last week, unwinding the bulk of 2021 purchases.

Meanwhile, Malaysian shares inched lower with the biggest-listed glove makers down the most.

Top Glove Corp announced on Friday it planned to raise HK$14.95 billion through a secondary listing in Hong Kong, a move that CGS-CIMB said would dilute earnings per share and was avoidable given that earnings over the next year was expected to be strong.