Asia laments searing US inflation as rate hike sees businesses

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  • Risk appetite weakens after US inflation surge
  • South Korean Won Leads Currency Decline
  • Chinese stocks plunge more than 2%

March 11 (Reuters) – Shares and currencies in emerging Asia fell on Friday after searing U.S. inflation figures raised the prospect of more aggressive interest rate hikes globally, while talks between Russia and Ukraine have shown no sign of de-escalating their conflict.

Stock markets in South Korea (.KS11) and Malaysia (.KLSE) plunged more than 1% each, while all emerging Asian currencies also sold off, with the won and Thai baht leading the declines .

Shares in China (.SSEC) fell more than 2%, marking a third straight weekly decline, weighed further by the U.S. Securities and Exchange Commission hinting at potential delisting risks for several Chinese companies. Read more

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Investors braced for a faster tightening of monetary conditions in the region after data on Thursday showed a 7.9% annualized jump in U.S. consumer inflation in February, the biggest increase in 40 years. Read more

The sentiment was further dampened after ceasefire talks between Ukraine and Russian foreign ministers in Turkey on Thursday made little apparent progress in resolving the conflict between the nations, which Russia calls it a “special operation”. Read more

In many emerging Asian economies, deep concerns about prices and imported inflation could unsettle central banks who may be forced to raise rates to counter price pressure, especially given soaring crude prices. during the week.

“Brent’s implied volatility remained high, however, suggesting oil market jitters may not have subsided yet,” analysts at OCBC Bank said in a note.

Yields on long-term bonds in Singapore, which rose nearly 4% this week, climbing another 31 basis points to 1.921%.

Thai stocks (.SETI) edged lower and escaped a punch as analysts said its central bank may not raise rates anytime soon despite a recent spike in inflation, due to risks to its sector tourism and its growth. Read more

“Thailand has to navigate rising inflation risks and the economy still struggling to recover from the pandemic and it is also particularly vulnerable to rising oil prices,” said Mitul Kotecha, senior emerging markets strategist. at TD Securities.

“However, I don’t see the central bank raising rates quickly, although it may be forced to do so if inflationary pressures continue to be sustained.”

STRONG POINTS:

** Major losers in the Jakarta Stock Index (.JKSE) include Midi Utama Indonesia Tbk PT (MIDI.JK) down 6.97% and Indo Straits Tbk PT (PTIS.JK) down 6.86 %

** Major losers in the FTSE Bursa Malaysia Kl Index (.KLSE) include Top Glove Corporation Bhd down 2.92% and Hartalega Holdings Bhd (HTHB.KL) down 2.29%

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Reporting by Riya Sharma; Editing by Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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