emerging markets in asia sold off sharply on friday after u.s. treasury yields rose overnight . indonesia<u+2019>s jakarta composite index closed 4% lower, the psei in the philippines tumbled 2.8% and malaysia<u+2019>s ftse bursa malaysia klci sank 1.1%. in shanghai, stocks entered a technical bull market on friday, closing 20% higher than a low reached on jan. 28. broad-based gains, in particular brokerage stocks in the afternoon, helped to consolidate the market<u+2019>s strength. infrastructure-related stocks jumped, while smaller-cap shares in shenzhen lagged. elsewhere, hong kong<u+2019>s hang seng index ended 1.3% lower, south korea<u+2019>s kospi closed 0.9% lower and taiwan<u+2019>s taiex fell 2.1%. <u+201c>global investors are favoring conditions in the u.s. market,<u+201d> said alex wijaya, senior sales trader at cmc markets, pointing to soaring u.s. treasury yields. <u+201c>we are seeing a general flowing to the u.s.<u+201d> the yield on the benchmark 10-year u.s. treasury note climbed to 2.118% overnight from 2.070% wednesday. that came on the back of the largest one-day rise in the 10-year yield in more than three years on wednesday. rising u.s. treasury yields act a floor for a number of u.s. assets, raising for the prospect for returns from many u.s. securities. this had the effect of pulling money out of asia, analysts said. <u+201c>we think there is some heightened concern in asia [about outflows] as well as inflation,<u+201d> said cynthia wong, head of emerging markets trading for asia-pacific fixed income and currencies at soci<u+00e9>t<u+00e9> g<u+00e9>n<u+00e9>rale . in the emerging markets, currencies, equities and bonds tend to move together, said tareck horchani, deputy head of asian-pacific sales trading at saxo capital markets. as investors pulled money out of emerging asia, regional currencies were hit hard. indonesia<u+2019>s rupiah was down 0.9% against the u.s. dollar friday, according to thomson reuters, and the malaysian ringgit was off 1.2%, according to tullett prebon. the rupiah<u+2019>s fall forced the indonesian central bank to defend the currency friday, according to bank indonesia senior deputy gov. mirza adityaswara. japan<u+2019>s nikkei bucked the regional selloff, rising 0.2%, even as the yen gained 0.3% against the dollar. yields on 10-year government bonds across the region hit multi-month highs friday, with those on japan<u+2019>s benchmark 10-year government bond last at negative 0.032%, up from negative 0.043% late thursday. that is the highest point since sept. 21. rising jgb yields lift the profits of japan financial companies, which invest heavily in those assets. nomura holdings was 5.1% higher and dai-ichi life holdings surged 8.8%. australia<u+2019>s s&p/asx 200 also rose 0.8%, lifted by a commodities rally. japanese industrial firms also jumped on expectations that they will benefit from u.s. president-elect donald trump <u+2019>s promises about infrastructure spending . mitsubishi heavy industries was up 3.7% and kawasaki heavy industries gained 4%. commodities also continued to rise on these expectations. copper, a core industrial metal, surged 3.6% thursday and has risen 7% since the u.s. election. iron ore jumped 4.4% to a two-year high thursday. this has lifted australian miners, with bhp billiton up 2.1%, fortescue metals group gaining 4.5% and rio tinto rising 2.4% on friday. the bank of korea left its base rate unchanged at 1.25% friday, reflecting uncertainty caused by mr. trump<u+2019>s surprise victory, said barclays economist angela hsieh. <u+201c>there are significant near-term uncertainties in the first few weeks after the election, as markets are waiting for president-elect trump to lay out his policy directions,<u+201d> ms. hsieh said. mr. trump<u+2019>s protectionist stance should also be a major concern, she added. <u+201c>the situation could be further complicated if the korea-u. s. free trade agreement came to be renegotiated, but we think it would be too early to call,<u+201d> she said. <u+2014>biman mukherji, i-made sentana, stephanie yang, kosaku narioka, robb m. stewart, kwanwoo jun, rachel rosenthal and christopher whittall contributed to this article. write to willa plank at willa.plank@wsj.com
asia emerging markets hammered; shanghai enters bull territory - wsj
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