*

Peso weakens 0.6%

*

Indonesian rupiah loses 0.4%

*

Investors await BSP and BOT meetings ahead

(Updates for afternoon trade)

By Rishav Chatterjee

Oct 6 (Reuters) - Philippine equities dropped more than

1% and the peso weakened against the U.S. dollar on Monday, as

investors stayed away from the archipelago over concerns tied to

a corruption scandal and persistent social unrest.

The MSCI Emerging Asia Index and a broader

MSCI Asia-Pacific ex-Japan Index both eased

about 0.5%, retreating from their highest levels since 2021 hit

in the previous session.

Trading volumes in emerging Asia equities stood well below

the 30-day average as market closures in China, Taiwan, and

South Korea affected momentum, with the latter two heavyweights

being the major beneficiaries of the recent AI-driven rally.

In the Philippines, the equity benchmark gauge

dropped as much as 1.8%, snapping a three-day winning streak.

The index lost 3.3% over the past month amid widespread protests

pertaining to a widening corruption scandal.

The Philippine president appointed a former Supreme Court

justice in mid-September to head a new commission which will

investigate alleged corruption in infrastructure projects,

focusing on flawed flood control facilities exposed after

monsoon rains and storms flooded towns and cities.

"The market (Philippines) continues to be out of favour

despite the recent sell off and unlikely to see improvement in

the near term in my view," said Rajat Agarwal, Asia equity

strategist at Societe Generale.

Its currency, the peso, weakened 0.6% against the

dollar on Monday, after having fallen over 2% in September.

Investors are now focused on the Bangko Sentral ng Pilipinas

(BSP) policy decision later this week. Maybank and DBS expect

the central bank to hold rates steady, while Standard Chartered

forecasts another cut.

It is a tough call between a dovish hold or a hawkish cut,

Aris Dacanay, an economist with HSBC, said, adding that the bank

expects the BSP to hold its policy rate at 5.00%.

Jakarta stocks were trading just below their

all-time high scaled in early trade. The index was on track to

end the session at a record closing level, as of 0706 GMT.

Bangkok's SET Index slipped 0.4%.

In currency markets, the peso and Indonesian rupiah

led declines in emerging Asia. The Singapore dollar eased

0.3%, while the Malaysian ringgit and Thai baht

edged lower.

Most ASEAN currencies, including the peso and rupiah, are

under pressure, tracking weaker local equities and recent

foreign outflows, said Christopher Wong, a currency strategist

with OCBC.

The Bank of Thailand meets later this week. Policymakers are

widely expected to cut rates by 25 basis points, according to a

Reuters poll, amid months of negative inflation, tepid exports,

and a dovish tilt under the new governor.

The baht, one of Asia's best-performing currencies this

year, had gained over 5% year-to-date by September before easing

slightly in recent sessions.

In other news, investor attention turned squarely to Japan,

where the yen JPY= tumbled and stocks surged more than 4% after

fiscal and monetary dove Sanae Takaichi was elected leader of

the ruling party.

HIGHLIGHTS:

** Indonesian 10-year benchmark flat at 6.327%

** Thai Sept headline CPI drops 0.72% y/y, more than

forecast

Asia stock indexes

and currencies at

0706 GMT

COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS

% DAILY YTD %

%

Japan -1.71 +4.79 4.75 21.97

China India +0.01 -3.55 0.46 5.76

Indonesi -0.45 -3.10 0.30 15.01

a

Malaysia -0.17 +6.05 0.03 -0.41

Philippi -0.55 -0.23 -1.78 -8.09

nes

S.Korea Singapor -0.31 +5.62 0.12 16.62

e

Taiwan -- +7.77 -- 16.18

Thailand -0.02 +5.97 -0.36 -7.94

(Reporting by Rishav Chatterjee in Bengaluru

Editing by Shri Navaratnam and Mrigank Dhaniwala)