Stock markets in emerging Asia were headed for their best week in several months on Friday, driven by optimism around trade deals with the United States, and an increasingly dovish tilt at regional central banks.
The MSCI gauge of emerging Asia stocks touched its highest in more than three years and was set to end the week 1.6% higher.
Stocks in Taiwan, which make up over a fifth of the index, rose 1% to a more than four-month high. TSMC, the world's largest contract chipmaker, rallied more than 2% after posting a record quarterly profit on Thursday.
An MSCI index of ASEAN equities, dominated by Singapore, surged to a more than nine-month high. Singapore's stocks touched a record high for the tenth straight day, which also marks its longest ever rally.
Indonesian equities jumped more than 1% to an over seven-month peak, led by data centre service provider DCI Indonesia, which surged over 16% to a record high, and Barito Renewables Energy, which gained about 8%.
A trade deal with the U.S. at a lower than previously announced tariff rate, alongside an increasingly dovish stance by the central bank, has helped drive inflows into equities. Domestic investors have net bought 6.21 trillion rupiah ($380.86 million) so far this month, as per exchange data.
In Thailand, the benchmark index rose 1%. It has surged almost 7% for the week and was set for its biggest gain since June 2020, driven by inflows on news of the government proposing a new central bank chief with a dovish bias.
Elsewhere, Malaysian stocks jumped 0.4%, while those in the Philippines ticked marginally higher. India's Nifty 50 slipped 0.7% to a more than three-week low.
Currencies in the region were mixed. Indonesia's rupiah, the Philippine peso, Thai baht, and Singapore's dollar advanced modestly against the U.S. dollar, while Malaysia's ringgit and the Indian rupee slipped.
Asian currencies have lost some ground over the past few sessions as the dollar index recovered from a more than two-year low hit earlier this month.
"Asian currencies have come under pressure amid an incipient rebound in the U.S. dollar, driven by renewed market focus on tariffs," MUFG senior currency analyst Lloyd Chan said.
"And while markets still hold net short positions on the U.S. dollar, some unwinding of those trades could lend support for the recent U.S. dollar rebound."
HIGHLIGHTS:
** Indonesia's 10-year benchmark yield slips to 6.558%
** Indonesia still negotiating tariff details
** Malaysia's economy likely grew 4.5% y/y in Q2
** Singapore's exports rise 13% annually in June - Reuters
