Philippine shares rise before central bank meeting; S.Korea bounces back on budget boost

Philippine shares climbed over 1% ahead of a monetary policy meeting as investors expected the country's central bank to stick to a dovish tone, while South Korean shares snapped four days of losses after a budget boost.

The Manila benchmark index hit its highest level in nearly a week. In line with other regional peers, Philippines' central bank is widely expected to leave its benchmark interest rate unchanged.

"BSP is set to continue to cite the need for accommodative monetary policy conditions as the economy grapples with a renewed wave of Covid-19 infections and a slow start to its vaccination drive", Mizuho Bank analysts wrote in a note.

Unlike the central banks in countries such as Russia and Brazil, which have embarked on a monetary tightening cycle, Asian peers are likely to maintain their dovish stance for some time, DBS Bank economists said.

"Base effects are expected to buoy growth and inflation in the region this year, but in absence of demand-side pressures and tighter labour markets, there will be little impetus to abandon the overall dovish hue".

South Korean shares, which had shed nearly 3% in last four sessions, bounced back after the country's parliament approved a 14.9 trillion won ($13.13 billion) supplementary budget to boost aid for small businesses and those taking a hit from the pandemic.

Elsewhere, stocks saw muted moves as a sell-off in Chinese technology shares due to concerns they will be de-listed from US bourses rattled some investors.

The US securities regulator is rolling out measures that would kick foreign companies off US stock exchanges if they do not comply with US auditing standards, which is widely expected to target Chinese firms.

Geopolitical concerns further added to investor caution after North Korea launched two ballistic missiles into the sea near Japan, fuelling tensions ahead of the Tokyo Olympics and ramping up pressure on the new Biden administration in Washington.

Thai stocks pared gains and the baht fell 0.4% after the country's exports in February posted a bigger-than-expected drop from a year earlier, weighed down by lower gold shipments.

ING analysts warned the figures should reinforce the downside growth risk to the economy, especially with continued sluggish exports and firmer imports narrowing the trade surplus.

"Such an economic backdrop and sustained political uncertainty should keep THB as one of Asia's underperforming currencies this year", they added.

Most other regional currencies weakened against the dollar, as the greenback hit a fresh four-month high.

The Indonesian rupiah, the Malaysian ringgit and the Taiwan dollar all dropped 0.2% each.