COLOMBO, Aug 8 – Southeast Asian stock markets fell today in active trade, led by Singapore, on concern about the global economic outlook after Standard & Poor’s downgraded the credit rating of the United States.
Singapore ended 3.7 per cent weaker at a 13-month closing low, recovering only a little from a 4.9 per cent fall at one stage, while Indonesia closed 1.8 per cent lower after tumbling as much as 5.2 per cent.
Malaysia ended 1.8 per cent down and Thailand fell 1.4 per cent.
“Investors are not sure what this downgrade really means to the United States and the global economy,” said Song Seng Wun, a Singapore-based regional economist at CIMB-GK Research.
“Investors have gone defensive and may stay only in limited, very liquid large caps that could give them some degree of comfort, so that they can flee any time. Today we see selling across the board rather than being selective.”
Trading volumes in Singapore and Malaysia were more than double their 30-day average, and Jakarta saw a 1.65 times its average.
Analysts said commodity companies could be worst hit due to fears of a global recession.
“Commodities tend to feel the heat most while financials, telcos, REITs and consumer staples are some sectors that should hold up better,” CIMB Thailand said in a market note.
“We expect Telkom Malaysia , Maybank , DBS, Ascendas Reit , Gudang Garam , DTAC (Total Access Communications) , Thai Union Frozen and AOT (Airports of Thailand) to weather these near-term volatile market conditions better.”
Thailand‘s top oil firm, PTT , and affiliate PTT Chemical fell 2.4 per cent and 1.6 per cent respectively while Indonesia‘s top miner, Bumi Resources, slumped 5.1 per cent.
Despite the gloom and risk aversion, the Philippines saw a net foreign inflow of US$38.4 million, but offshore investors offloaded US$144.8 million of shares in Indonesia and Thailand saw an outflow of about US$178 million, according to bourse data.
“This is the time to turn to fundamental valuations ... There are a handful of undervalued blue chip stocks that are promising for a higher gain in the future,” Said Yasmin Soulisa, an analyst at Jakarta-based Analyst Bapindo Bumi Sekuritas.
The Singapore market fell in strong volume ahead of a national holiday tomorrow, with many investors preferring to cut risky positions since they would be unable to do so tomorrow if the global jitters got worse.
Singapore-based Najeeb Jarhom, head of research at AmFraser Securities, said in a note that support on the main Singapore index had failed to hold at 2,920 and the next support level was at 2,875. The index closed at 2,884 today. – Reuters