By Rashmi Ashok
Oct 27 (Reuters) - Malaysian shares rose on Tuesday as political tensions eased after the largest party in the ruling coalition declared its support for the prime minister, providing some respite for the premier, who has faced calls to resign.
Most other Asian stock indices were firmly in the red, as soaring global coronavirus cases threatened to derail a quick economic recovery, even as uncertainty ramped up with just days left for the U.S. presidential election.
The United Malays National Organisation (UMNO) party pledged to back Prime Minister Muhyiddin Yassin, tempering the political uncertainty stemming from calls for his resignation after the king rejected his request for emergency rule on Sunday.
The benchmark equity index .STI rose 0.6%, while the ringgit MYR= held steady at 4.163 against the dollar after three sessions of losses.
"The king's advice for members of parliament to not continue with any irresponsible action that could undermine the stability of the current administration could quiet political noise in the near term," analysts at CGS CIMB wrote in a note.
They added that averting an emergency decree was a favourable outcome for equity markets but cautioned that it may not be enough to reverse foreign investors from selling off their holdings in the near term.
Thai markets .SETI edged lower as protests demanding reforms of the powerful monarchy and calls for the prime minister to resign continued undeterred.
"The most contentious protesters' demand of reform to monarchy has a very high hurdle and this may keep the protests ongoing for now. This shall keep the overall sentiment around domestic Thai assets and the baht THB=TH weak," Citi analysts noted.
Philippine stocks .PSI slid as much as 1.7% and were set for their biggest drop since August, as investors sold off shares after a massive six-session run of gains of 10%.
Asian currency markets bore a quiet look, with investors shying away from big bets ahead of the U.S. election. The Taiwan dollar TWD=TP was the sole exception, continuing its bullish run and adding more than 1%.
Analysts at Citi wrote that cautious risk appetite ahead of U.S. elections may also cause further unwinding of bullish fast money positioning in Asian FX, mainly in the yuan CNY=CFXS, the South Korean won KRW=KFTC and the Singapore dollar SGD=.
"But medium term prospects for Asia FX remain supportive, in our view, with the dollar likely to weaken over the medium term, stronger than expected recovery of the region and control over the spread of COVID-19," the analysts added.
** In the Philippines, top index losers are LT Group Inc LTG.PS down 3.81% and BDO Unibank Inc BDO.PS down 2.99%
** Top gainers on FTSE Bursa Malaysia Kl Index .KLSE include Hartalega Holdings Bhd HTHB.KL up 3.85% and Axiata Group Bhd AXIA.KL up 2.52%
** Indonesian 10-year benchmark yields are up 0.8 basis points at 6.62% while 3-year benchmark yields are down 0.5 basis points at 5.224%
Asia stock indexes and currencies at 0451 GMT
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(Reporting by Rashmi Ashok in Bengaluru. Editing by Gerry Doyle)
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