EMERGING MARKETS-Taiwan leads Asian rally as AI optimism lifts sentiment; Thai baht weakens

(.) * MSCI Asia equities index rises 0.3% * BSP to stand pat on rates – Reuters poll * Peso flat, stocks inch higher ahead of BSP call By Rishav Chatterjee Oct 9 (Reuters) – Taiwan stocks scaled another fresh record on Thursday, spearheading gains across Asia as markets regained momentum on renewed optimism around AI-driven headlines, while Philippine equities edged up ahead of a closely-contested rate decision. The MSCI index of emerging Asian equities, which had slipped more than 1% in the previous session, rose 0.3%, while the broader MSCI Asia-Pacific ex-Japan index also nudged higher. Overnight, Wall Street notched fresh peaks as a renewed rally in AI-linked tech stocks overshadowed concerns over a prolonged U.S. government shutdown and the absence of major economic data. In Taipei, the benchmark climbed as much as 1.5%, marking its fourth record in five sessions amid a feverish AI-driven run. Shares in Indonesia and Malaysia advanced 0.6% and 0.2%, respectively, while Thailand’s benchmark jumped 0.7%. Singapore’s index, however, eased slightly. The Monetary Authority of Singapore is set to meet on October 14, with analysts at OCBC predicting it to be a close call between flattening the slope and staying on hold. Elsewhere, Manila’s benchmark traded without a clear direction as investors awaited the Bangko Sentral ng Pilipinas’ rate call. Fourteen of 23 economists polled by Reuters expect the central bank to keep its policy rate steady at 5%, as the country battles elevated inflation and political unrest over an infrastructure-corruption probe. The peso was flat. Weak growth in Philippines, worsened by the infrastructure corruption scandal, argues for further easing, but the same scandal has rattled the peso, making rate cuts risky for currency stability, said Vishnu Varathan, managing director, head of macro research, Asia ex-Japan at Mizuho Securities. In effect, the scandal has deepened both growth and FX pressures, sharpening the policy trade-off, he added. In currency markets, the Thai baht weakened to its lowest since late August, last trading at 32.48 per U.S. dollar, after the Bank of Thailand surprised markets on Wednesday by holding rates unchanged but signalling readiness to ease if growth falters further. Analysts still expect two rate cuts by year-end. Other currencies in emerging Asia eked out modest gains against a steady U.S. dollar on Thursday. The Singapore dollar and its Taiwanese counterpart gained 0.1% and 0.2%, respectively, while the Indonesian rupiah added 0.2%. The Malaysian ringgit traded flat. Asian ex-Japan currencies are likely to continue range-bound, two-way trading in the absence of major data catalysts, with moves guided by overall equity market sentiment, said Christopher Wong, currency strategist with OCBC. Attention remains on the duration of the U.S. government shutdown, as a prolonged impasse could start to weigh on economic activity, Wong said. HIGHLIGHTS: ** Thailand to start buying bad household debt this month ** Thailand to support technology investments, finance minister says Asia stock indexes and currencies at 0421 GMT COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS % DAILY YTD % % Japan +0.10 +3.05 1.43 23.18 China India +0.04 -3.55 0.14 6.08 Indonesi +0.21 -2.60 0.55 15.97 a Malaysia +0.05 +6.08 0.18 -0.73 Philippi +0.00 +0.25 -0.11 -6.69 nes S.Korea Singapor +0.14 +5.53 -0.19 17.43 e Taiwan +0.10 +7.46 0.94 18.59 Thailand -0.23 +5.36 0.69 -6.16 (Reporting by Sameer Manekar in Bengaluru; Editing by Mrigank Dhaniwala)

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