Most emerging Asian equity markets gained on Monday, with Indonesia's hitting a record high, while currencies held steady on investor caution ahead of the U.S. Federal Reserve's rate decision this week.
The MSCI index of emerging Asia equities and a broader index tracking Asian equities outside Japan edged 0.2% and 0.1% higher, respectively.
The Federal Reserve meeting on Tuesday and Wednesday is expected to be among the most contentious in recent history, with five of 12 voting members of the Federal Open Market Committee having either voiced opposition or scepticism about further easing.
MUFG analysts said in a note that the key element of the decision would be the Fed's forward guidance on its policy trajectory beyond December, as investors look for clarity on the pace and extent of easing in the year ahead. Market swaps imply more than an 86% probability of a Fed rate cut this week.
Jakarta stocks jumped as much as 1% to a new record, extending a streak of fresh highs logged in the last two weeks and recouping Friday's losses.
Indonesia has unveiled a 16.23 trillion rupiah ($974.48 million) stimulus package this year under new Finance Minister Purbaya Yudhi Sadewa, while liquidity support for state banks and a stronger growth outlook have further bolstered investor sentiment.
President Prabowo Subianto also launched Danantara in February, a $20 billion state fund that is expected to invest heavily domestically.
"Hopes are high for Danantara - the country’s new holding company for state-owned enterprises (SOEs) - to lead strategic projects, improve efficiency, and catalyze growth," analysts at DBS wrote in a note.
Taiwan's equities rose as much as 1%, and the Taiwanese dollar also firmed 0.5%, with DBS noting that AI-driven tech demand and year-end electronics sales should continue to support exports ahead of Tuesday's November trade data.
Stocks in Malaysia, on the other hand, slipped as much as 0.9% to hit their lowest since November 28, while the ringgit was little changed.
The currency remains the region's top performer this year with gains of nearly 9%, though analysts at Maybank say further appreciation may be limited as short-term Malaysian Government Securities (MGS) yields hover near the policy rate.
Still, high foreign-currency deposits could provide additional support if more conversions occur. Currencies elsewhere in emerging Asia were muted, however, with the South Korean won edging 0.2% higher, while the Thai baht inched up 0.1%.
Markets in the Philippines were closed for a holiday.
HIGHLIGHTS:
** Thailand launches air strikes at Cambodia as border tensions reignite
** Hong Kong election turnout near record low amid anger over deadly fire
** India says no advisory to stop clean energy funding
** Japan's Q3 GDP contraction worsens on weak capex; unlikely to sway BOJ on rate hike - Reuters
