US-China trade talks in focus as Malaysia dips

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BENGALURU (Aug 10): Asia's emerging currency and stock markets were mixed today as some improvement in Chinese factory data countered nervousness ahead of a round of trade talks between Washington and Beijing at the end of the week.

Malaysia's stock market was the biggest loser, down nearly 1%, with the country's big protective glove makers falling across the board.

Analysts cited profit taking after strong gains due to the coronavirus pandemic.

Trading was lighter than usual due to holidays in Japan and Singapore and moves in the region's currencies, which have been boosted over the past month by the broad weakness of the US dollar, were tight.

Both Malaysia's ringgit and Indonesia's rupiah eased around a quarter of a per cent.

"Asia-Pacific markets are looking at a cautious day's trading," said Michael McCarthy, a strategist at CMC Markets.

"Ongoing concerns about Sino-US relations, and the lack of bipartisan agreement on a US fiscal support package, are weighing on sentiment."

Morgan Stanley in a week-ahead note said the upcoming trade talks between the US and China this weekend would be the main risk event for emerging markets.

Chinese shares, however, edged higher as factory deflation slowed in July and industrial activity climbed back towards pre-Covid-19 levels.

The Chinese data helped send trade-sensitive South Korean stocks to a more than two-year high, led by a near 13% jump in Hyundai Motor shares.

Indonesia's three-year benchmark yield is up 5.3 basis points (bps) to 5.315%; Malaysia's 10-year benchmark yield is up 3.4bps to 2.532%.