Asian currency, stock markets hit by China COVID unrest

Asian emerging markets came under selling pressure on Monday, with the South Korean won and China's yuan declining the most, as protests in major Chinese cities over strict COVID-19 curbs dampened the outlook for the world's second-largest economy.

The South Korean won USDKRW weakened 1.1%, snapping a three-day winning streak, while the Indonesian rupiah USDIDR fell 0.4% for its biggest percentage loss since Nov. 16.

The Singapore USDSGD and Taiwan dollars USDTWD gave up 0.2% each, while the Philippine peso USDPHP slipped marginally.

Investor sentiment was hit by protests in China, a manufacturing powerhouse and Southeast Asia's top trading partner, which flared for a third day and spread to several cities in a blow to risk appetite.

Khoon Goh, head of Asia research at Australia and New Zealand Banking Group, said the protests in China hurt risk sentiment and stoked uncertainty.

"This will continue to be the main driver for Asian markets in the near term until we see how the situation evolves."

Markets are adopting cautious approach due to the "unusual and rare" nature the protests, and on uncertainty about how the Chinese government will respond to the unrest, Goh said.

Analysts at Barclays are expecting a sharp drop in China's economic growth in 2022 to 3.3% from last year's 8.1%.

The Chinese yuan USDCNY retreated 0.4% at 0423 GMT to its lowest level since Oct. 11.

Elsewhere, Thailand's baht USDTHB added 0.2%, while stocks SET lost 0.2%, with investors cautiously awaiting the country's central bank decision on interest rates on Wednesday.

The Bank of Thailand will raise interest rates by a modest quarter-point for a third straight meeting amid fragile tourism-reliant growth and signs inflation has started to ease, a Reuters poll of economists found.

Across the region, most stock indexes remained subdued with equities in South Korea KOSPI losing 1.1%, China 000001 giving up 1%, and Taiwan TAIEX slipping 1.1%.

However, stocks in India NIFTY and the Philippines PPSEI tacked on 0.1% and 0.6%, respectively.

The Philippines' economic growth may ease next year after a likely expansion of more than 7% this year as global risks linger, but it will remain resilient, a top official said on Sunday.

Separately, South Korea's central bank and government rolled out additional support measures for the local credit market, including a 2.5 trillion won ($1.86 billion) repo operation by the Bank of Korea to be carried out in December.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 3.6 basis points to 6.979%

** Top losers on the Singapore STI STI include Yangzijiang Shipbuilding (Holdings) BS6 and CapitaLand Investment 9CI

** Markets in Malaysia closed for a holiday