Trading volume fell below the 30-day average for most markets, reflecting weakness elsewhere in Asia after five consecutive days of gains.
A pick-up in demand for risky assets from last week softened on speculation about a rate rise in China this weekend, as well as a Moody's report that the scale of problem loans at local governments in China may be much bigger than thought.
Stocks in Indonesia fell 0.7 per cent and Malaysia just 0.03 per cent, led by consumer and financial stocks, which had led the market rallies to record highs yesterday.
Singapore fell 0.75 per cent to 3,129.69, snapping five consecutive sessions of gains as investors took profits in banks, and Thai stocks fell 0.5 per cent.
AmFraser Securities said the 3,200 level remained a tough hurdle for the Straits Times Index as the market entered the reporting season.
“Recent reporting periods were often marked by sharp but unsustainable rallies with immediate subsequent months finishing weaker,” said Najeeb Jarhom, head of research at AmFraser.
Bucking the trend, Philippine shares rose 0.4 per cent, setting a record for the second day as inflows lifted big caps, pushing conglomerate San Miguel Corp 3.4 per cent higher.
Vietnam gained 1.3 per cent after a flat session yesterday.
Indonesia, a darling of emerging market investors this year, saw a modest US$9.5 million (RM28.6 million) in inflows today after US$266 million in the previous four sessions and US$2.17 billion this year, the biggest in Southeast Asia, according to Thomson Reuters data.
Thai shares ended down in a choppy session, reversing a 4.7 per cent surge yesterday.
The market was waiting for the appointment of economic ministers in the new government, amid caution about the potential inflation risk from policies of the winning Puea Thai party in the election, including a big rise in the minimum wage.
A Reuters poll yesterday showed economists had revised up expectations for interest rates as the Bank of Thailand may need to tighten monetary policy faster than thought this year to tame inflation.
Despite the worries, another US$146 million flowed into the Thai market today, on top of yesterday's US$348 million, which was the highest amount this year, stock exchange data showed.
“The line-up of ministers in key positions should be seen soon. We are focused on the names of the new finance minister, commerce minister, transport minister and lastly ICT minister, whose policies could significantly impact the market in the next few months,” said broker KGI Securities.
The resounding victory by the opposition Puea Thai party in the weekend general election removed some political uncertainty from the market but, in terms of valuations, Thai stocks are not looking that attractive.
According to Thomson Reuters I/B/E/S data, the MSCI Thailand index is trading three per cent above its average 12-month forward price-to-earnings ratio of the past 10 years, similar to MSCI Malaysia and MSCI Philippines.
The MSCI Singapore index is 11 per cent below its average.
Among actively traded stocks in Southeast Asia, Indonesia's biggest firm by market value and main vehicle distributor, Astra International, dropped 3.2 per cent and Malaysia's Public Bank 0.5 per cent.
Singapore's Overseas-Chinese Banking Corp lost nearly two per cent and Thai Kasikornbank 1.1 per cent. — Reuters
