(Sept 10): Emerging Asian stocks declined and currencies were flat on Thursday as the biggest wave of attacks on shipping in the ongoing six-month-old war in the Middle East pushed crude oil prices above US$100 a barrel.
The MSCI EM Asia equities index slipped as much as 1.3%, while another gauge tracking Asean stocks fell to a one-week low.
Brent crude surpassed the US$100 mark on Wednesday for the first time since late July, threatening to stoke inflation and widen trade deficits in oil import-dependent emerging economies in Asia, pushing equities lower and bond yields higher.
James Ooi, a market strategist at Tiger Brokers, said US President Donald Trump’s prediction that the war with Iran will end “immediately after” the US mid-term elections in November “adds another layer of uncertainty.”
Stocks in Seoul and Taipei closed 0.3% and 0.5% lower. Mainline stock indexes of other net energy importers such as Thailand and the Philippines also declined 0.2% and 0.4%, while those in Jakarta and Singapore fell at least 0.4%.
Malaysia’s benchmark gauge fell 0.7% to a one-week low, while the ringgit appreciated nearly 0.2% to 4.06 per dollar after weakening steadily for nearly two weeks. The net exporter of crude oil and petroleum products remains moderately exposed to higher oil prices, with export and fiscal gains helping cushion growth and inflation pressures.
Currencies traded rangebound, with the MSCI gauge of emerging market currencies hovering just below its record high.
“Asian currencies have been relatively resilient because they are not trading purely as an energy story,” said Fesa Wibawa, an investment manager at Aberdeen Investments.
The rally in the Japanese yen has contributed to broader dollar weakness, and regional currencies tend to benefit from that correlation, Wibawa said.
Central-bank management, external buffers and portfolio flows have also helped offset some of the terms-of-trade pressure from higher energy prices, Wibawa added.
The Singapore dollar, the Thai baht and the Philippine peso were largely unchanged, while the Indonesian rupiah weakened 0.2% to 17,535 against the dollar.
The South Korean won, strengthened against the greenback to 1,340.10, not far from its October 2024 peak of around 1,349.
Wibawa notes the won’s strength is driven more by the broader dollar move and equity-related flows, hedging and institutional rebalancing than by South Korea’s energy fundamentals, and warned that a sustained period of high oil prices would still represent a headwind.
Investors are also closely watching the US inflation print due on Friday for further clues on the Federal Reserve’s next policy move as rising oil prices stoke concerns of inflation.
Uploaded by Magessan Varatharaja
