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EMERGING MARKETS-Malaysia stocks fall to 5-month low on political risks, currencies await U.S. election

    * Malaysia stocks fall as central bank meet, budget loom
    * Rupiah best bet in Trump win scenario - Deutsche Bank
    * U.S. election on November 3
    * China, South Korea factory activity expand in October

    By Nikhil Nainan
    Nov 2 (Reuters) - Malaysian stocks hit their lowest in more
than five months on Monday as political uncertainty remained
high ahead of a central bank meeting and the country's budget
this week, while the U.S. election kept Asia's other emerging
markets in tight ranges.
    Factory activity in South Korea and China showed a robust
recovery in October with shares in Seoul ending 1.5%
higher, the most in the region, while China's blue-chip stocks
 gained 0.4%.
    Traders face a busy week as a surge in COVID-19 cases sends
many European countries back into lockdown, threatening further
economic pain for the global economy, while the prospect of a
contested U.S. election on Tuesday could lead to days, if not
weeks, of uncertainty. 
    OCBC analyst said Asian markets face a mixed start to the
week from "potentially whippy action as investors remain nervous
about the upcoming U.S. election results."
    The election could open the door to friendlier U.S. trade
and foreign policy to some countries if Democratic candidate Joe
Biden wins, potentially dialling back tensions with China, the
world's second-largest economy and key driver for the region. 
    In Kuala Lumpur, stocks fell 0.8%, while the ringgit
 inched lower.
    On Tuesday, Malaysia's central bank is expected to leave its
policy rate unchanged and on Friday the government will present
its first budget focussed on tackling the pandemic's fallout.

    Over the weekend, Malaysia's prime minister urged lawmakers
to pass the 2021 budget, in spite of efforts by the opposition
to oust his government and pressure from unhappy partners within
the governing coalition.
    "The upcoming budget has become a contentious political
issue," ING said in a note, with the prospect of the budget not
passing fuelling fears of yet another political crisis.
    Currencies in the region also stuck to tight ranges, with
the Chinese yuan up 0.1%, while Indonesia's rupiah
 was down by the same percentage value. 
    Any post-election uncertainty could send investors toward
the dollar and away from riskier bets on emerging currencies in
Asia. 
    "Even a small decline in Biden's probability of winning – in
the event of delay in being able to call the election, with or
without the prospect of a contested result – could evince an
outsized reaction in Asian FX," analysts at Deutsche Bank said.
    They added that the rupiah would be the best regional hedge
if Trump were to win.
    Markets in the Philippines were closed for a public holiday.
        
    HIGHLIGHTS: 
    ** Malaysia's 10-year benchmark yield up 1.5 basis points to
2.636% 
    ** Top Glove Corp was the top loser on the FTSE
Bursa Malaysia Kl Index 
    ** Wilmar International climbed over 5% in
Singapore after reporting strong third-quarter results on Friday

           Asia stock indexes and currencies at 0641 GMT
 COUNTRY      FX RIC      FX       FX     INDEX    STOCKS   STOCKS
                          DAILY %  YTD %           DAILY %  YTD %
 Japan                    -0.06    +3.73           1.39     -1.53
 China                    +0.07    +4.10           -0.04    5.67
 India                    -0.28    -3.94           -0.12    -4.43
 Indonesia                -0.07    -5.13           -0.28    -18.82
 Malaysia                 -0.07    -1.56           -0.82    -8.43
 Philippines              -        +4.53           -        -19.08
 S.Korea                  +0.13    +2.01           1.46     4.66
 Singapore                -0.03    -1.61           0.68     -24.28
 Taiwan                   +1.11    +5.24           0.36     4.95
 Thailand                 +0.03    -3.98           0.08     -24.30
 

 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Shailesh Kuber)
  
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