Asian emerging markets experienced a significant rally on Thursday, marking their largest gain in over two years. This surge resulted from U.S. President Donald Trump’s decision to temporarily halt some of his stringent tariffs, prompting a buying frenzy in previously battered stocks. The MSCI index for emerging Asian stocks jumped by 4%, which is the most substantial single-day increase since mid-November 2022.
Similarly, stocks in ASEAN countries saw a remarkable rise of 5%, their best performance since the onset of the COVID-19 pandemic. Most regional currencies also showed strength against the U.S. dollar. The Malaysian ringgit and Indonesian rupiah increased by 0.5%, recovering from a record low that the rupiah had reached just a day earlier.
This sudden shift in Trump’s policy came in response to the turmoil his tariffs had caused in global financial markets, resulting in a swift decline in equities and substantial losses in market value. Regional stock indices reflected this optimism, with Singapore’s FTSE Straits Times index soaring as much as 9% after a significant 15% drop from its recent high. Other markets in Indonesia, Malaysia, and Thailand also noted gains of approximately 5%.
Taiwan’s stock index rose over 9%, while South Korea’s KOSPI increased by 6.6%. In the Philippines, stock markets climbed 1.2% right before the central bank announced a quarter-point reduction in its key interest rate. While the temporary suspension of tariffs appears to reduce the immediate threat to emerging Asia’s economic performance, analysts caution that the region is not yet out of danger.
It’s important to note that this reprieve does not include China, which remains Southeast Asia’s largest trading partner. As tensions between the two global giants continue, economists suggest that a protracted standoff may be more likely, with potential for further escalation in trade disputes.