South East Asian markets: domestic-demand plays lift mood despite global woes

Some Southeast Asian stock markets edged higher on Tuesday as optimism about domestic demand lifted consumer stocks and a recovery in crude prices helped resource shares, but investors remained wary of a possible Greek debt default and the faltering US economy.
Stocks in Indonesia snapped a four-session losing streak, although turnover fell to half its 30-day average. Southeast Asia's second best performer this year gained foreign inflows of $210 million, the biggest in more than two months. "The volume today is very thin. The Indonesian market needs some further correction this week as the local market has been slow to catch on to the regional market weakness," said John Teja, director of Ciptadana Securities in Jakarta.
"The focus should shift to the consumer sector. Indonesia's strong GDP growth and low inflation should make this sector attractive." In a report on Tuesday, Morgan Stanley said it was changing its sector preference from global commodities to structural domestic plays, with a recent upgrade of Indonesian banks to attractive, and it did not now expect the Indonesian central bank to raise rates in the second half.
A combination of factors such as global commodity price softening, a slowdown in global growth momentum and a decline in Indonesian food prices had reduced the risk of a spike in inflationary pressure and further tightening in 2011, it said. Indonesia's main vehicle distributor and biggest listed firm, Astra International, led the most actively traded stocks, rising 1.7 percent, and Bank Mandiri, Indonesia's largest lender, gained 0.7 percent.
Other regional markets ended mixed, with Singapore nearly flat, erasing an early gain. The Philippines and Vietnam fell. Equities in Malaysia posted small gains. Thai stocks climbed 1.9 percent, reversing a loss on Monday amid political uncertainty ahead of a general elecition on July 3.
The MSCI index of Southeast Asia advanced 0.7 percent by 0932 GMT, reversing a fall on Monday to 11-week lows, trailing a 0.95 percent gain in the MSCI index of Asia-Pacific shares outside Japan. Resource shares advanced in line with crude oil. Among outperformers, Thailand's number two energy firm, PTT Exploration and Production, jumped 4.2 percent and Malaysia's Petronas Gas gained 1.3 percent.