Rebound as global sentiment improves

BANGKOK: Southeast Asian stock markets gained in holiday-thin trade on Monday, led by blue chips, as local investors hunted for value after Federal Reserve Chairman Ben Bernanke raised hopes for further action on the troubled US economy.

Foreign buying, however, remained thin with some regional markets shut for holidays. Long-struggling Vietnam was the region's best performer following data released last week suggesting inflation may have hit a peak.

Stocks in Singapore ended the day up 1.59 percent, with market turnover falling to 0.7 times its monthly average ahead of a market holiday on Tuesday.

Malaysia , which traded for just a half day, edged up 0.17 percent before market holidays and will reopen on Friday. Thai stocks rose 1.8 percent, their biggest rise in two weeks, and Vietnam surged 2.2 percent, its largest gain in more than one week.

The Philippines was shut on Monday and Tuesday, while Indonesia was on holidays for the week.

Investors concluded the Fed was leaving the door open for action even though many traders believe it has limited power to pull the economy out of a rut. That allowed investors to re-focus on economic fundamentals across Southeast Asia, particularly on relatively good prospects for consumption.

"Regional equities are getting a bounce as its looks like markets have discounted so much bad news these days that the contrarian trade right now is to go long," said Andrew Yates, head of international equity sales at Asia Plus Securities in Bangkok.

Global stocks jumped almost one percent on Monday while the dollar struggled after Bernanke's comments.

World shares rose 0.9 percent, with Asian markets tracking a strong bounce for Wall Street, which closed up 1 percent following Bernanke's keynote speech on Friday.

Thailand's market added foreign outflows of $61 million on Monday, taking the total this month to $1.45 billion.

A VIETNAM TURNAROUND

Vietnam stocks are showing stirrings of life after a difficult year in which the benchmark Ho Chi Minh Stock Exchange index fell more than 20 percent from Jan. 1 to Aug. 11. Since then, it is up more than 7 percent.

But the buying is almost entirely local. Vietnam had $0.35 million in outflows on the day, according to Thomson Reuters data. In the past two weeks, foreign outflows have totalled $0.69 million

Gains in Vietnam came with expectations that inflation may have finally peaked. The stability of Vietnam's beleaguered $100-billion economy and its attractiveness to investors hinge on whether policymakers stick to their guns in their battle against inflation, which hit 23 percent in August.

"So far no fresh foreign cash flows have entered Vietnam, which is still a risky place in the eyes of foreign investors," said Trinh Hoai Giang, deputy general director at Ho Chi Minh City Securities.

In Thailand, its biggest refiner, Thai Oil , jumped 6.3 percent, pushing its 14-day Relative Strength Index (RSI) to 42.5 at the close from 26.8 on Friday. An index below 30 indicates a stock is considered oversold.

Singapore-listed rig builder Keppel Corp surged 4 percent, reversing losses on Friday, with its 14-day RSI closing at 36.3, against 27.7 on Friday.

Genting Hong Kong , a cruise ship and casino operator, rose 4.6 percent after it reported net profit rising more than five times for the half year ended June, partly helped by an increase in gaming revenue.

Copyright Reuters, 2011