Emerging Asian Economies Press Forward Amidst Trade Tensions
The stock markets in emerging Asian economies have shown significant resilience in the face of US President Donald Trump’s latest tariff threats. On Thursday, these markets continued to move forward, led by South Korea, as investors bet that the most damaging scenarios are unlikely to materialize.
Market Performance
An MSCI gauge of emerging Asian equities saw a slight increase, supported by stocks in South Korea, which jumped 1.6% to a near four-year high, and Taiwan stocks, which advanced 0.8%. A subset of Asean equities reached a two-week high, with Singapore stocks, which account for nearly half of the index, hitting a new high for the seventh consecutive session. This was driven by strong inflows into industrials, telecom, and banks.
Investor Sentiment
Investors have largely dismissed Trump’s latest tariff threats as rhetoric, expecting them to be a tactic to extract more concessions from trade partners. According to analysts, the market has become desensitized to Trump’s noise, and the volatility created by his statements has decreased over time. Ernest Chew, head of Asean equities at BNP Paribas Asset Management, noted that investing in Asean will remain focused on a bottom-up approach, with a keen eye on attractive sectors and companies.
Trade Negotiations and Currency Market
Market participants are closely watching the trade negotiations between emerging economies and the United States. The visit of US Secretary of State Marco Rubio to Asia during an Asean summit in Kuala Lumpur is particularly significant. In the currency market, most EM Asia currencies rebounded as the dollar slipped from a two-week high. The Philippine peso and Thailand’s baht led the way, firming 0.4% each against the US dollar.
Currency and Stock Market Movements
Malaysia’s ringgit erased early gains to trade largely flat, following the country’s central bank slashing its key interest rate for the first time in five years. A fortnightly survey by Reuters showed traders trimming their long positions in most Asian currencies, although bets on the Taiwan and Singapore dollars increased. Among stock markets, Indonesia jumped to a three-week high, while Malaysia turned flat and the Philippines slipped further to finish 0.6% in the red.
Conclusion
In conclusion, the stock markets in emerging Asian economies have shown remarkable resilience in the face of trade tensions. Investors remain focused on attractive sectors and companies, and the market has become less reactive to Trump’s statements. As trade negotiations continue, market participants will be closely watching the developments, and the currency market is expected to remain volatile. However, the overall trend suggests that emerging Asian economies will continue to press forward, driven by strong fundamentals and attractive investment opportunities.
