Asian stocks, FX edge higher but Omicron threat persists

Dec 27 (Reuters) – Emerging Asia’s stocks and currencies began the last week of the year on a positive note on Monday, but gains were capped as China and Japan faced prospects of tighter curbs amid rising COVID-19 cases.

Singapore’s dollar firmed 0.2% to lead gains, followed by the South Korean won and the Taiwanese dollar , up 0.1% each, as the greenback (.DXY) remained little changed.

Stocks in Taiwan (.TWII) and Malaysia (.KLSE) rose 0.7%, while most other markets traded between down 0.1% to up 0.1%.

Financial market activity was subdued in the last week of the year with some centres closed for public holidays.

Tokyo shares (.N225) tripped as more cases of the highly transmissible Omicron variant of coronavirus were discovered in Japan, while China reported its highest daily rise in local COVID-19 cases in 21 months over the weekend.

“As the spread of the variant strain proliferates further, the resumption of domestic social restrictions cannot be ruled out; just as many of these countries have tightened or brought back international travel restrictions,” Mizuho analysts wrote in a note.

China’s northwestern city of Xian, the country’s new COVID hot spot, entered a fifth day of lockdown but was yet to report a case of the Omicron variant.

The yuan eased slightly while Shanghai equities (.SSEC) ticked up 0.2% after a heavy sell-off in the previous session, with property firms making marginal gains on the potential for looser curbs in the beleaguered sector.

Malaysia’s benchmark stock index hit a five-week high, supported by an 8% jump in world’s biggest latex glove maker Top Glove Corp , which usually benefits from COVID-19 headlines.

South Korean shares (.KS11) fell as investors booked profit on semiconductor stocks after last week’s rally.

Meanwhile, the Thai baht , set to be Asia’s worst performing currency this year, fell 0.3% to 33.50 per dollar. The baht has been badly hurt by dim prospects for tourism, a key driver of Thailand’s economic growth that has been hit by the pandemic.

The country last week reinstated mandatory quarantine for foreign arrivals and later scrapped some New Year events on finding its first Omicron cluster.

HIGHLIGHTS

** Indonesian 3-year benchmark yields are down 8.5 basis points at 4.422%

** Philippine 3-year benchmark yield is up 10.7 basis points at 3.187%​​

** Top gainers on the Singapore STI (.STI) include Dairy Farm International Holdings Ltd (DAIR.SI), up 2.6%, and Yangzijiang Shipbuilding Holdings Ltd (YAZG.SI), up 1.54%

Reporting by Anushka Trivedi in Bengaluru; Editing by Sam Holmes

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