Emerging Markets: Indonesia rupiah hovers near record low; Brazil in focus
EMERGING MARKETS-Indonesia rupiah hovers near record low; Brazil in focus .
By Roshan Thomas
Oct 26 (Reuters) - Indonesia's rupiah hovered near its record low of 18,190 per dollar, while stocks fell more than 1% as investors weighed MSCI's market-status warning and political developments in Brazil.
Investor attention in Brazil centred on the fallout from President Luiz Inacio Lula da Silva's election victory after Senator Flavio Bolsonaro, the right-wing candidate favoured by many investors, refused to concede.
Brazilian markets were yet to open, with the real BRL= up 6.4% so far this year and the benchmark Bovespa index .BVSP 8.4% higher.
"President Luiz Inácio Lula da Silva's surprise re-election with 51.8% of valid votes challenges a Brazilian asset rally driven by expectations of a market-friendly administration after Senator Flávio Bolsonaro's first-round victory," UBS analysts said in a note.
In Indonesia, the Jakarta stock index .JKSE fell over 1.7% earlier in the session before trimming losses to down about 0.9%.
Markets continued to assess global index provider MSCI's warning that Indonesian equities could be downgraded to "standalone" market status, while Bank Indonesia's governor said on Monday the central bank remained present in the foreign-exchange market to maintain orderly supply and demand conditions.
"....the underlying concern appears specific to Indonesia’s equity market rather than a deterioration in the country’s broader macroeconomic or sovereign-credit fundamentals," said Fesa Wibawa, an investment manager at Aberdeen Investments.
The rupiah IDR= weakened to 18,125 per US dollar, hovering near its record low and extending its losses this year to about 8%.
Fesa said uncertainty over the outcome of MSCI's review and the scale of any resulting equity outflows could keep the rupiah under pressure in the near term, despite Indonesia's resilient sovereign-credit fundamentals.
Meanwhile, the Philippine peso PHP= hit a record low of 63.919 per US dollar. The currency has shed about 8% so far this year, making it one of the region's weakest performers alongside the Indonesian rupiah.
Analysts at HSBC said the currency's weakness reflects concerns over the Philippines' persistent current account deficit, low foreign direct investment and dwindling foreign-exchange reserves.
Among regional equity markets, South Korean shares .KS11 fell 1.5% ahead of earnings from chipmakers SK Hynix 000660.KS and Samsung Electronics 005930.KS later this week.
Investors also await results from US technology heavyweights Alphabet GOOGL.O and Microsoft MSFT.O for clues on spending related to the ongoing AI buildout.
Tech-heavy Taiwan .TWII was closed for a public holiday, while Philippine stocks .PSI and Singapore shares .STI shed 1.5% and 0.3%, respectively.
Thailand's benchmark index .SETI edged 0.6% higher ahead of the central bank's policy decision on Wednesday, with markets widely expecting rates to remain unchanged for a fourth consecutive meeting.
Investors also awaited a raft of policy decisions from major central banks this week, with markets pricing in steady rates from the US Federal Reserve, Bank of Japan and European Central Bank.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields rise to 7.454%
** Thai September exports rise 24% on year, above forecast
** RBNZ set to raise cash rate on October 28; December hike bets grow
Asia stock indexes and currencies at 0716 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | -0.11 | -0.25 | .N225 | -0.80 | 23.54 |
China | CNY=CFXS | +0.03 | +4.79 | .SSEC | 0.19 | -6.84 |
India | INR=IN | -0.26 | -5.58 | .NSEI | 0.13 | -13.40 |
Indonesia | IDR= | -0.44 | -8.00 | .JKSE | -0.96 | -37.70 |
Malaysia | MYR= | -0.02 | -0.69 | .KLSE | -0.62 | -4.67 |
Philippines | PHP= | -0.52 | -7.97 | .PSI | -1.53 | -6.80 |
S.Korea | KRW= | +0.08 | +8.84 | .KS11 | -1.46 | 29.79 |
Singapore | SGD= | -0.08 | +0.52 | .STI | -0.33 | 16.31 |
Taiwan | TWD=TP | - | -3.29 | .TWII | - | 58.96 |
Thailand | THB=TH | -0.21 | -6.98 | .SETI | 0.59 | 24.79 |
(Reporting by Roshan Thomas in Bengaluru; Editing by Sherry Jacob-Phillips and Nivedita Bhttacharjee)
((Roshan.Thomas@thomsonreuters.com))
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