EMERGING MARKETS-Asian stocks rise on upbeat China PMI, currencies restrained
Graphic: World FX rates here
Graphic: Foreign flows into Asian stocks
Most Asian stocks up, but pull back slightly from early gains
Strong USD keeps Asian FX under pressure
Political tensions, rising COVID-19 cases a big risk -analysts
By Rashmi Ashok
June 30 (Reuters) - Asia’s emerging stock markets rose on Tuesday, boosted by encouraging China manufacturing activity that offered some hope for a recovery in the world’s second-largest economy, while modest gains in the U.S. dollar kept regional currencies under pressure.
Data on Tuesday showed Chinese factory activity expanded at a stronger pace in June as the economy continued to recover after the government lifted strict lockdowns and ramped up investment.
While Asian stock markets benefited, currencies shed early gains as the U.S. dollar (=USD) strengthened during the day to add 0.3% against a basket of currencies.
For the quarter, however, most emerging Asian currencies were set to clock gains, led by the Indonesian rupiah (IDR=) with a near 13% rise followed by the Thai baht (THB=TH) - up almost 6% so far.
Analysts sounded a note of caution about Tuesday’s equity gains, saying underlying troubles relating to a jump in coronavirus cases and political ructions still posed a risk to markets.
China’s parliament passed national security legislation for Hong Kong, which is set to give Beijing more control over the financial hub. Details on the law are expected later in the day.
The United States, in response, began eliminating Hong Kong’s special status under U.S. law that gives it various privileges not afforded to the mainland.
“Nothing in the world has materially changed, but the urge to keep the party going rolls on,” wrote Jeffrey Halley, senior market analyst at OANDA.
“Hong Kong concerns though, are likely to be on top of investors’ minds. It has the potential to deliver some potentially negative headlines later in the session.”
The rupiah widened initial losses to fall 0.5%, a day after its finance minister said the government may sell low-yielding bonds to the central bank through private placement to help finance a ballooning fiscal deficit.
Indian stocks (.NSEI) were among the smallest gainers in the region, after the country on Monday banned a large number of Chinese mobile apps in its strongest move yet targeting China in the online space since a border crisis erupted between the two countries this month.
** Brokerages positive on Singapore Exchange’s acquisition of BidFX
(SGXL.SI) , adding 2.6%
** Indonesian 10-year benchmark yields were down 2.2 basis points at 7.21%, while Malaysia’s 10-year benchmark yield climbed 0.8 basis points to 3.057%
Asia stock indexes and
currencies at 0703 GMT
COUNTRY FX RIC FX FX YTD INDEX STOCK STOCKS
DAILY % S YTD %
Japan (JPY=) -0.08 +0.89 (.N225) 1.33 -5.78
India (INR=IN) +0.08 -5.49 (.NSEI) 0.29 -15.01
Indones (IDR=) -0.49 -2.53 (.JKSE) 0.11 -22.10
Malaysi (MYR=) +0.02 -4.48 (.KLSE) 0.56 -5.41
Philipp (PHP=) -0.28 +1.62 (.PSI) 1.68 -20.57
Singapo (SGD=) -0.17 -3.69 (.STI) 0.90 -19.41
Taiwan (TWD=TP) +0.45 +2.09 (.TWII) 0.68 -3.13
Thailan (THB=TH) -0.06 -3.17 (.SETI) 1.48 -14.58