BANGKOK, June 22 – Some Southeast Asian stock markets retreated today in cautious trade ahead of a US Federal Reserve meeting and resource shares pulled back due to volatility in global oil prices.
The markets climbed to multi-week highs at one point, albeit in relatively light volume, amid hopes that Greece would avoid a debt default, which lured bargain-hunters back to beaten-down emerging equities.
However, stocks in Singapore , Thailand and Vietnam erased early gains and they posted small losses on the day. Philippine shares rose 0.8 per cent, building on a 1.4 per cent rise the previous session.
Malaysia ended up 0.4 per cent in a choppy session while Indonesia‘s main share index rose 0.7 per cent to around two-week highs.
“The Jakarta Composite Index strengthened as global markets are rallying after fear over the sovereign debt crisis facing Greece subsided and investors snapped up beaten-down stocks,” said John Teja, director at broker Ciptadana Securities.
The euro stabilised today and Asian shares rose after the Greek government won a vote of confidence, leaving investors to shift their focus to the US Federal Reserve’s news conference later in the day.
Southeast Asia reported mixed fund flows, with Indonesia gaining US$61.5 million in inflows, the biggest in a week, Philippine shares posting a tiny US$1 million in outflows and Thailand reporting nearly US$20 million, reversing from US$14.8 million in inflows yesterday.
Valuations of regional stocks have fallen by 2-5 per cent this month, with the MSCI index of Singapore trading at 13.06 times forward price to earnings against 13.44 late last month, Thomson Reuters I/B/E/S data showed.
Thai stocks had the biggest contraction of 5 percent. The MSCI index of Thailand trades at 10.75 times forward price to earnings against 11.32 in late May.
The underperformance of Thai stocks was mainly due to rising political tension ahead of the general election on July 3, prompting Thai stock downgrades by a series of big foreign houses.
But several brokers advised buying on weakness.
“It’s probably time to start accumulating Thai stocks, going into the market step by step. Some stocks have fallen and they are good companies, with good balance sheets, good businesses and good valuations,” said Andrew Stotz, Thailand strategist at broker Kim Eng Securities.
Among losers in the region, Thai energy firm PTT fell 1.2 per cent, Singapore-listed commodities firm Noble Group eased 1 per cent and Astra Agro Lestari, Indonesia’s largest listed plantation firm, eased 0.6 per cent.
Also in Jakarta, Bumi Resources, Asia’s biggest thermal coal exporter, jumped 3.2 per cent as it expected coal sales and prices in the second quarter to be higher than in the first. – Reuters
