SINGAPORE: Philippine shares plunged over 2 percent and Indonesian stocks fell for a sixth straight session on Tuesday, as investors braced for new Federal Reserve Chairman Jerome Powell's first policy meeting starting later in the day.
The Philippine Stock Exchange PSEI Index ended 2.1 percent lower, posting its lowest close since mid-September, after declining as much as 2.7 percent.
The Philippine economy is more exposed to US rate hikes with current account and budget deficits. Inflation also quickened to 3.9 percent in February, the fastest pace in more than three years under a revised price index.
"I think what is alarming the region right now is the Fed is open to raising its benchmark rates probably four times (this year). It is a story of a shift of funds from emerging markets back to the US given the improved economic outlook," said Lexter Azurin, a senior equity analyst at AB Capital.
As of Monday, foreign investors had offloaded Philippine equities worth a net $195 million so far this month, according to exchange data.
The Fed is widely expected to raise rates on Wednesday, with market participants looking for any hints on the number of remaining rate hikes in store for 2018 in Powell's commentary the next day.
Financials and real estate stocks were the top losers with Ayala Corp declining 7.2 percent and BDO Unibank Inc shedding 2.7 percent.
Indonesian shares dropped 0.7 percent to their lowest close since late December with Telekomunikasi Indonesia down 4.2 percent.
Foreign investors had sold Indonesian equities worth a net $714 million in the month to Monday, according to exchange data.
An index of the country's 45 most liquid stocks fell 0.9 percent.
Thai shares closed little changed with gains in materials stocks being largely negated by weakness in financials. Bangkok Bank Pcl fell 1 percent.
Singapore shares snapped four sessions of falls, buoyed by financials. Lender Oversea-Chinese Banking Corp Ltd rose 1.4 percent, while DBS Group Holdings Ltd gained 0.9 percent.
Malaysian shares recovered from early losses to end 0.5 percent higher as financials and telecom services stocks rose. Public Bank Bhd gained 1.7 percent.
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