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Stocks

Nikkei Asia300 nears pre-rate-hike level

Lull in outflows sees foreign money return to some Asian emerging markets

TOKYO -- Asian emerging-market equities are regaining their footing as fears of a capital exodus recede and positive economic signs emerge.

The Nikkei Asia300 Index, which tracks some of the region's most promising listed companies outside of Japan, rose 0.85% Thursday to 1,051.46, its highest close since just before the U.S. Federal Reserve's December interest rate hike. The index climbed for the eighth straight session.

Weak emerging-market currencies are the flip side of a strong dollar, putting pressure on countries vulnerable to capital flight. Indonesia had seen some of the quickest outflows. But net selling in Jakarta-listed stocks by foreign investors has eased. Meanwhile, in the Philippines, foreigners turned net buyers of local equities for the first time in 10 weeks in the final week of December, according to Japan's SMBC Nikko Securities.

Economic expansion in the U.S. will create tailwinds for Asian exporters, Nomura Securities argues. A broad range of economically sensitive Asia300 components, among them electronics suppliers and automakers, have seen renewed buying. Thursday's top percentage gainers included Taiwanese display panel maker Innolux and South Korea's LG Electronics. Among the biggest decliners were airlines, which stand to lose out from higher crude oil prices.

But a full-fledged Asian emerging-market rally remains a ways off, market watchers say. Given the threat posed by the protectionist policies espoused by U.S. President-elect Donald Trump, investors remain skeptical, said Phua Lee Kerk, chief strategist at Singapore-based Phillip Capital Management.

(Nikkei)

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