Indonesia shares gain on govt measures to boost recovery; most others fall

Most Asian stock markets fell on Thursday as investors exercised caution following mixed cues from Wall Street overnight, but Indonesia posted solid gains on government measures to limit the economic fallout from the pandemic.

The Singaporean, Malaysian, Thai and Indian benchmarks shed between 0.2% and 0.9%, following a weak finish by US peers.

"The loss of momentum on Wall Street overnight was enough to tempt Asian investors to book profits this morning", said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.

Philippine stocks saw their worst day in nearly a week, dropping as much as 0.7%, as data showed bank lending fell for the first time in more than 14 years in December, reflecting weak consumer and business activity.

Bucking the trend, Indonesia, which has suffered the worst COVID-19 outbreak in Southeast Asia, climbed as much as 1.7%.

The country laid out plans to expand its COVID-19 recovery budget this year from earlier targets to 619 trillion rupiah ($44.2 billion) and extended its tax incentives for businesses to boost economic recovery.

Indonesia is expected to post its first annual contraction in gross domestic product (GDP) since 1998 on Friday. However, analysts expect the fourth-quarter GDP growth to contract less severely than compared to the previous quarter.

That would be in line with data showing a recovery in domestic demand, improving consumption trends and an uptick in investment loan growth and export growth, said Venkateswaran Lavanya, economist at Mizuho Bank.

"While government spending will continue to be the mainstay for growth, we expect Bank Indonesia will also chip in by supporting credit and liquidity conditions", she added.

Central banks and vaccination drives remain key focus points for markets.

Bank of England is expected to keep its benchmark interest rate on hold at a policy meeting later in the day, following similar moves earlier in the week by numerous central banks, including Thailand and Australia.

China's central bank said it will keep liquidity reasonably ample and is set to resume injecting cash via 14-day reverse repos through open market operations for first time since late December.

On the vaccine front, Singapore became the first country in Asia to approve Moderna's COVID-19 vaccine on Wednesday, while Thailand's resort island of Phuket is planning private coronavirus vaccinations for 250,000 residents.

Most currencies in the region fell as the dollar traded near its strongest levels in more than two months against the euro and the yen.

But the Taiwan dollar extended a strong rally that has been driven by robust demand for the country's tech exports.