BENGALURU: Equities in emerging Asia advanced on Thursday, lifted by recent US trade deals with Vietnam and Indonesia and rising expectations that central banks across the region will adopt a more dovish monetary policy stance.
Singapore’s FTSE Straits Times Index notched a record high for the ninth straight session, marking its longest winning streak since early 2014, underscoring investor confidence in the city-state’s resilience amid global trade headwinds and its favourable tariff positioning relative to peers.
“Singapore’s reciprocal tariffs are not just lower than Malaysia (25%) and Vietnam (20%), but also comparable developed economies which produce high-end exports, including the EU (30%) and Japan (25%),” said Maybank analysts.
Singapore ran a trade deficit with the US last year.
Following stronger-than-expected growth data, Maybank analysts expect the Monetary Authority of Singapore to maintain its appreciation bias at both the July and October meetings.
Both Vietnam and Indonesia have clinched trade deals with the United States before the August 1 deadline.
This has raised hopes that there could be more deals coming through amid ongoing negotiations, said Christopher Wong, a currency strategist at OCBC. “Also there remain expectations that Fed will return to easing cycle at some point later this year to next year,” Wong said.
Meanwhile, recent news from both Thailand and Indonesia has helped markets lift bets on further monetary policy easing.
Thailand is reportedly set to nominate Vitai Ratanakorn as its new central bank chief, a veteran banker popular for his dovish tilt.
The equity benchmark in Bangkok was the top gainer among its regional peers on Thursday, rising 3.6% to its highest since late May.
“Earlier signs this week pointed to the appointment of Vitai Ratanakorn, who would have been seen as a dovish appointment and an advocate of lower rates as well as coordinated fiscal and monetary policy to revive the economy,” said analysts at Citi.
Indonesia lowered interest rates on Wednesday and signalled further room for easing, pushing the equity index in Jakarta
2.2% higher over the last couple of days.
Meanwhile, currency markets in Asia were on edge amid speculation over Federal Reserve Chair Jerome Powell’s future.
While US President Donald Trump sought to calm nerves by stating he was “highly unlikely” to remove Powell, the uncertainty has added a layer of volatility across global markets.
Indonesia’s rupiah fell to its weakest in more than three weeks, while the South Korean won hovered around its late-June lows.
The Thai baht, Singapore’s dollar, the Philippine peso, and the Malaysian ringgit all traded lower.
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