Equities in emerging Asia edged higher on Friday after a selloff in the previous session, while Singapore stocks hovered near 3-month lows as banks remained under pressure on concerns over corporate earnings and the impact from higher bond yields.
The MSCI EM Asia equities index edged 0.2% higher after losing nearly 2% on Thursday. Markets in South Korea and Taiwan, which together account for more than half of the index, were closed for national holidays.
Singapore's benchmark equity index slipped as much as 0.8% before trimming losses to trade 0.2% lower around noon. The index was at its lowest level since early July, and on track to end the week down more than 4%, its worst performance since April 2025.
DBS Group, Southeast Asia's largest lender, fell 1.8% to a near three-month low. Smaller rival United Overseas Bank followed suit, falling 2.1%, while Oversea-Chinese Banking Corp recouped most losses to trade 0.1% lower.
The three banks account for more than half of Singapore's benchmark index. Combined, they have shed more than $26 billion in market value over the past two trading sessions.
The selloff in Southeast Asian lenders follows JPMorgan and Citi flagging concerns over the earnings outlook for ASEAN banks on the back of surging long-term bond yields, higher funding costs and the normalisation of exceptional wealth-related income.
While the fundamentals of Singapore's three banks remain solid, market expectations may have been "somewhat elevated", said Kathy Chan, equity analyst at Morningstar.
"While we expect wealth net new money and market-related customer activities to remain healthy, the growth momentum in wealth and trading income may normalize relative to the strong performance seen in 1H26 due to a higher comparison base," Chan added.
All three banks are scheduled to report their third-quarter earnings in November.
Malaysia's CIMB Group
fell as much as 0.7%, extending losses to a fourth straight session, while Thailand's Kasikornbank slipped 1.7% to its lowest level since early July. That, however, did not dampen sentiment in the broader markets, with stocks in Kuala Lumpur and Bangkok rising 0.6% and 0.5%, respectively.
Among currencies, the Philippine peso gained about 0.2% after hitting a record low of 63.059 per dollar in the previous session. The currency has weakened more than 6% this year as the country's oil-sensitive economy grapples with the twin headwinds of sticky inflation and rising bond yields.
The Philippines' government 10-year bond yields have breached 8%, in line with the recent selloff in its global peers.
"The market backdrop remains challenging for PHP assets, with a weak peso and sticky yields underscoring investor concerns over inflation and macro balances, DBS senior economist Radhika Rao said in a note.
"With inflationary pressures likely to be persistent, the likelihood of further hikes in 4Q26 rises. We maintain our call for a 25bp hike in October and include another measured hike to our baseline for December," Rao added.
Other regional currencies were little changed against the US dollar, with the exception of the Thai baht, which gained 0.3%.
MSCI's EM currencies gauge was flat during Asian trade.
HIGHLIGHTS:
** Malaysia's August industrial production up 5%, slightly above forecast
** Philippines to adopt international bond pricing convention from 2027
** China militia boat spotted for first time off Taiwan's east coast, patrol finds - Reuters
