BENGALURU: Tensions over a planned U.S. ban on major Chinese apps kept most Asian markets subdued on Friday, with Philippine stocks suffering an added blow from a jump in coronavirus infections that made its caseload the highest in Southeast Asia.
Citing security concerns, President Donald Trump issued executive orders on Thursday that will ban U.S. transactions with ByteDance, the Chinese owner of the popular video-sharing app TikTok, and Tencent, owner of the WeChat app, in 45 days' time.
Worries about whether China would retaliate through trade restrictions dented most currencies in early trade, with the Malaysian ringgit, often seen as a proxy for China's yuan, and trade-sensitive Singapore dollar and South Korean won all down.
"It is much tougher for China to react in a manner that could jeopardise investment into the country. However, it seems likely that tensions will ratchet higher ahead of U.S. elections, a factor that could play badly for risk assets," Mitul Kotecha, senior emerging markets strategist at TD Securities, wrote in a note.
"While Asian FX including the yuan have been supported by dollar weakness lately, USD/Asia may at the least be in for some short-term consolidation if not an outright increase in pressure as tensions worsen."
The rising geopolitical tensions come at a time when a number of the region's developing economies are struggling with fresh coronavirus outbreaks.
Philippine equities closed 1% lower after the country recorded a surge in infections late on Thursday, overtaking Indonesia as the worst-hit country in Southeast Asia.
The spike in cases also followed dismal data on Thursday which showed gross domestic product plunged 16.5% in the second quarter.
For the week, most Asian currencies are set for gains, having benefited from sustained dollar weakness.
The ringgit was the top performer with a 1.2% weekly gain so far.
Apart from some technical factors, Maybank attributed the ringgit's outperformance to recent stability in the yuan and oil prices, robust foreign inflows into domestic bonds and strong fiscal and monetary responses by the government to deal with the COVID-19 crisis.
The Indonesian rupiah was the worst performer with a 0.5% weekly loss, as coronavirus cases spread unabated and a lockdown was placed in and around its capital, sparking worries about further economic fallout from the virus. - Reuters