BENGALURU (Oct 9): Emerging Asian equities edged higher on Friday after a sell-off in the previous session, while Singapore stocks recouped some losses after hitting three-month lows as concerns over the impact of higher bond yields on bank earnings persisted.    

The MSCI EM Asia equities index edged 0.5% higher after losing nearly 2% on Thursday. 

Markets in South Korea and Taiwan, which together account for more than half of the index, were closed for national holidays.

Singapore's benchmark equity index recouped most of their losses to trade flat, after slipping as much 0.8% earlier in the day. The index, however, was on track to end the week with a nearly 4% loss, its weakest performance since early April.

DBS Group, Southeast Asia's largest lender, clawed back some losses to trade down 0.4%, its lowest since early August. Smaller rival United Overseas Bank followed suit, down 0.6%, while Oversea-Chinese Banking Corp reversed course to edge 0.4% higher.

The three banks account for more than half of Singapore's benchmark index. Combined, they are on track to lose US$27 billion (RM110.35 billion) in value over the past three trading sessions.

The sell-off in Southeast Asian lenders follows JPMorgan and Citi flagging concerns over the earnings outlook for Asean banks on the back of surging long-term bond yields, higher funding costs and the normalisation of exceptional wealth-related income.

While the fundamentals of Singapore's three banks remain solid, market expectations may have been "somewhat elevated", said Kathy Chan, equity analyst at Morningstar.

"While we expect wealth net new money and market-related customer activities to remain healthy, the growth momentum in wealth and trading income may normalise relative to the strong performance seen in 1H26 due to a higher comparison base," Chan added.

Elsewhere, stocks in Manila rebounded as much as 2.8% after falling over 2% the previous day. That helped the benchmark gauge post a 2.5% gain over the week, snapping a four-week losing streak.

Gary Tan, portfolio manager at Allspring Global Investments, attributed the rebound to a positioning-driven recovery rather than a change in fundamentals.

"A more durable rebound will likely require stabilisation in global bond yields and oil prices, along with evidence that corporate earnings can remain resilient despite higher financing costs."

Meanwhile, the Philippine peso edged up 0.1% after hitting a record low of 63.059 per dollar in the previous session. The currency has weakened more than 6% this year as the country's oil-sensitive economy grapples with the twin headwinds of sticky inflation and rising bond yields.

While the peso remains vulnerable to higher oil prices and a stronger dollar, a pickup in remittance and IPO inflows could help support the currency, said Mitul Kotecha, head of EM Strategy at Barclays in Singapore.

Other regional currencies were little changed against the US dollar, with the exception of the Thai baht, which gained 0.4%.

MSCI's EM currencies gauge was flat during Asian trade.

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