EMERGING MARKETS-Vietnam, Thailand stocks slump as US tariffs dent risk sentiment

By Himanshi Akhand

April 4 (Reuters) - Vietnam and Thailand equities continued their steep declines on Friday as investors shunned risky assets in trade-reliant emerging economies after U.S. President Donald Trump's harsher-than-expected tariffs fanned fears of a global recession.

Thailand's benchmark stock index .SETI slid 2.3% to its lowest level in more than five years, bringing its year-to-date losses to just under 19%.

Stocks in Vietnam .VNI slumped as much as 5.8% to their lowest level in 15 months, extending their slide after Thursday's near 7% drop.

Michael Kokalari, chief economist at VinaCapital, said the selling was fairly uniform across-the-board, indicating that investors would need more time and information to digest the likely impact of the U.S. tariffs on the economy and corporate earnings.

Trump hit export-driven Southeast Asian nations with some of the heftiest tariffs, with a 46% levy on Vietnamese exports and 37% on Thailand.

Vietnam and Thailand are major exporters to the U.S., having gained from the so-called China+1 strategy under which manufacturers, seeking to escape tariffs on China, shifted some of their Chinese production to nearby countries.

Kokalari said that intense negotiations between Vietnamese and U.S. trade authorities were expected in the weeks ahead, but there was no consensus on what the final tariff might be.

"Given how high the initial negotiating position is, it is hard to see a final figure of anything less than 25%, which would represent a material hit to Vietnam's GDP growth," he said in a note.

Other regional stock markets also fell, with indices in Malaysia .KLSE and the Philippines .PSI down about 1% each. Malaysia faces tariffs of 24% and the Philippines 18%.

Singapore stocks .STI slumped 3% in their fifth session of losses and were on course for their biggest one-day percentage drop in nearly eight months.

The city-state's trade minister said on Thursday that the U.S had imposed tariffs of 10% despite the two countries having a free-trade agreement and Singapore running a bilateral trade deficit with the U.S.

Currencies in the region were broadly higher against the greenback, which was set for its worst week in a month. FRX/

The Malaysian ringgit MYR=, Philippine peso PHP= and the Thai baht THB=TH appreciated between 0.3% and 0.5%.

Emerging markets, however, face the threat of sliding currencies and a possible deterioration of their sovereign credit.

"In the near-term, chances of significant policy easing have gone up, with central banks likely prioritising tactical growth over other considerations, such as inflation and even exchange rates," HSBC analysts said.

Elsewhere, South Korea's Constitutional Court upheld parliament's impeachment and removal of President Yoon Suk Yeol. The won KRW=KFTC added 1% and stocks .KS11 fell 1.7%.

HIGHLIGHTS:

** Markets in China, Taiwan, and Indonesia closed for a holiday

** Philippine annual inflation slows to near five-year low in March

** Thai March headline CPI rises 0.84% y/y, below forecast

** Japanese stocks set for biggest weekly decline since 2020 .T

(Reporting by Himanshi Akhand in Bengaluru; Editing by Kate Mayberry)

((Himanshi.Akhand@thomsonreuters.com))