JAKARTA (Reuters): Stock markets forged ahead in emerging Asia on Friday, as investors saw US President Donald Trump's tariff threats as more of a strategic move to extract favourable concessions in US trade talks now in focus before an August 1 deadline.
An MSCI gauge of equities in emerging Asian countries jumped to its highest since early January 2022, while a subset of ASEAN equities hit a six-week high.
Traders have reacted more calmly to tariff threats this time, compared with the dramatic swings of early April after Trump's Liberation Day levies triggered chaos in global financial markets.
"Sentiment has improved with the increased certainty surrounding the conclusion of US-imposed tariffs," said Kenneth Tang, senior portfolio manager at Nikko Asset Management. "This clarity (on tariffs) has helped to alleviate fears."
The anxiety has been allayed largely because import duties remain unchanged for most countries, there is further room for talks, and traders are betting the new US threats are tactics designed to extract more concessions.
Globally, US and European stock futures dipped during Asia trade after Trump stepped up tariff threats against Europe and Canada.
In South-East Asia, Singapore's FTSE Straits Times index set a new all-time high for an eighth straight session, driven by strong inflows in its industrial and telecom sectors, while Indonesia's benchmark jumped to a three-week high.
Thailand's shares jumped more than 1% to become the region's top gainers, while benchmarks in Malaysia and the Philippines ticked modestly higher.
Tang said he remained constructive on Asean for the second half, with a preference for Singapore because of attractive valuations and strong dividend yields, and the Philippines, for its improved macroeconomic outlook.
"We believe Asean is well-positioned for further performance due to a weakening USD and domestic policy accommodation."
Asean groups 10 South-East Asian nations with Indonesia, Malaysia, Singapore and Thailand among its top economies.
In China, the Shanghai Composite hit a nine-month high, and the blue-chip CSI300 index scaled a seven-month peak.
South Korea's KOSPI gauge hovered around its August 2021 high, a day after the central bank held interest rates steady, though a majority of its board signalled another rate cut in the next three months.
Most regional currencies held their ground against the U.S. dollar, though India's rupee and Malaysia's ringgit slipped marginally. Thailand's baht ticked higher, while Japan's yen eased 0.4%.
Overnight, Brazil's real rebounded from a plunge of more than 2% the previous day after Trump threatened a 50% tariff on imports from the South American nation.
An MSCI index of global emerging currencies trended marginally lower. - Reuters
