Southeast Asian markets stay down

Southeast Asian stock markets continued to slide on Tuesday as fears that the eurozone debt crisis could spread dampened appetite for global risk assets while lower oil prices prompted selling in resource and commodities shares. Indonesia's main share index dropped 1.4 percent after hitting a record high on Friday. Jakarta is Asia's top market this year as strong domestic consumption has bolstered its economic outlook amid global uncertainty.
Stocks in Singapore, Thailand and Vietnam dropped over 1 percent while Malaysia and Philippine shares posted smaller losses. However, Indonesia's central bank held its benchmark policy rate at 6.75 percent on Tuesday. In Bangkok, most investors expect the Bank of Thailand to raise its policy rate by 25 basis points to 3.25 percent on Wednesday. For a Thai rate preview, Widespread concerns about inflation and the budget deficit have been in the limelight since last week due to the pro-growth policies of the Puea Thai Party, which is to form the next government.
The Thai index has now lost all of the sharp gains recorded on July 4, the day after a general election that was welcomed by investors for removing political uncertainty. Broker Citi Investment Research said some policies such as infrastructure investment and financial leverage boded well for sectors such as building materials, contractors, banks and property. However, the broker left its index target unchanged.
Foreign investors sold Thai shares worth $98 million on Tuesday, the exchange said. They bought almost $500 million in three sessions after the election results last week but fund flows were choppy thereafter. Indonesia posted $27 million in outflows on Tuesday after three sessions of inflows and the Philippines saw $7.6 million in outflows, adding to $3.3 million in the previous two sessions, according to Thomson Reuters data. The MSCI index of Southeast Asia fell 1.7 percent by 0912 GMT, while the MSCI index of Asia excluding Japan plunged 2.7 percent.
As equity markets tumbled on concerns more countries will be engulfed by the euro zone's debt problems, Indonesian coal miner Adaro Energy dropped 3.9 percent to a one-week low and Singapore's Keppel Corp, the world's largest oil rig builder, fell 2 percent. Energy Development Corp, the Philippines' largest producer of geothermal power, lost 0.7 percent, Malaysian palm plantation firm IOI Corporation fell 0.6 percent and Thai olefins maker PTT Chemical slid 1.9 percent. In Bangkok, caution about rising interest rates hurt property shares as it could lead to higher home loan rates, denting demand. The property subindex dropped 2 percent. CapitaLand slumped 4 percent and Keppel Land was off 1.9 percent.