PHILIPPINE: China-exposed Asian currencies weakened on Thursday, while the Philippine stock market slumped over 3% as investors priced in heightened tensions around security and trade in a second term for Donald Trump as US president.

Trump has promised to slap new and potentially hefty tariffs on a wide swath of goods from countries including China and Mexico, while his vice presidential candidate, JD Vance, has proposed a 10% tax on remittances.

The Philippine benchmark index fell up to 3.4%, accumulating losses of about 4.5% in two sessions. The country is considered particularly sensitive to remittances. “It appears that markets are pricing in some risk of lower remittance flows and slower domestic consumption in the aftermath of a Trump win,” said Shivaan Tandon, markets economist at Capital Economics.

Among currencies, China’s yuan is trading at a three-month low, while Mexico’s peso has slumped to its lowest level in over two years. The South Korean won fell past 1,400 to its lowest since late 2022. “The won’s weakness is being aggravated by the fact that the structure of South Korea’s exports is formed in a way sensitive to China,” said Baik Seok-hyun, economist at Shinhan Bank.

Any tariff hikes will also hurt chipmakers in Taiwan, South Korea and other countries that produce for Chinese tech firms. “Asia, excluding China, has become more dependent on the US as a source of end-demand.

A universal tariff would also limit the incremental benefit Asia ex-China receives from supply-chain diversification efforts,” Morgan Stanley analysts said in a note. Still, they said it remained to be seen how quickly the proposed tariffs would be implemented.