EMERGING MARKETS-Indonesia shines as beaten-down assets rebound; Malaysia steady after hold

By Roshan Thomas

Nov 5 (Reuters) - Indonesian shares jumped more than 3% and the rupiah strengthened on Thursday as bargain hunters returned to beaten-down assets, while Malaysian markets were little changed after the central bank delivered a widely expected hold on rates.

Sentiment towards Indonesian stocks has soured this year after an MSCI warning that the country could face a downgrade from its emerging-market benchmarks due to concerns over market transparency and trading practices.

"After the recent selloff, Indonesian equities are trading at historically very cheap valuations, while underlying macro and corporate fundamentals have not deteriorated to the same extent," said Fakhrul Fulvian, chief economist at Trimegah Sekuritas Indonesia.

Data released on the day showed the country's economy expanded 5.47% in the third quarter from a year earlier, surpassing analyst expectations in a Reuters poll.

Supporting sentiment further, authorities said Indonesia's stock exchange would begin disclosing whether shareholders owning more than 1% of a listed company are controlling shareholders or affiliated with them, as part of efforts to improve market transparency.

"Today's rally shows that valuations have become compelling. But for this to become a sustainable recovery rather than just a thin-liquidity rebound, Indonesia needs to turn cheap valuations into renewed foreign inflows," Fulvian said.

Indonesia's benchmark stock index .JKSE, one of the world's worst-performing markets this year, surged as much as 3.1%, while the rupiah firmed to 18,073 per US dollar.

Bank Negara Malaysia held its benchmark interest rate steady for an eighth straight policy meeting, against a backdrop of higher inflation and robust economic growth.

The economy has been supported by the global artificial intelligence boom, which has boosted demand for Malaysia's technology products and semiconductors.

Lavanya Venkateswaran, senior ASEAN economist at OCBC, said policymakers remained on a path towards policy normalisation given robust economic growth and an inflation outlook expected to strengthen through 2027.

"We maintain our long-held call for a 25-basis-points rate hike in January 2027."

In North Asia, AI-linked stocks came under pressure after Democrats secured commanding majorities in both the US Senate and House of Representatives, raising expectations of greater support for renewable energy and stricter oversight of data-centre development.

South Korea's chipmaker-heavy KOSPI .KS11 tumbled over 5%, while Taiwan's benchmark index .TWII closed 3.2% lower.

Elsewhere, weak oil prices supported oil-importing markets across emerging Asia, with the Philippines' benchmark index .PSI climbing 1.9% to a two-week high.

Meanwhile, Asian currencies advanced as the US dollar retreated, with the Philippine peso , Singapore dollar and Thai baht rising between 0.2% and 0.5%.

The Taiwan dollar bucked the broader trend and fell 0.2%, with MUFG analysts attributing the currency's underperformance to sustained foreign selling of Taiwanese equities.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields at 7.740%

** Thailand central bank chief says 2% growth not enough

** BOJ debated need for more rate hikes, scope for faster moves, September minutes show