South East Asian markets: Indonesia snaps two-day fall

Indonesian stocks climbed almost 1 percent on Tuesday, outperforming others in the region amid good demand for energy shares because of high global oil prices, but bank stocks fared badly as rising inflation hit sentiment.
Markets in the region saw relatively low turnover in a week shortened in many centres by Lunar New Year holidays. Volume in Indonesia fell to 0.88 times its 30-day average, with Singapore's easing to 0.91 times and Thailand's at 0.98 times.
Singapore ended a tad higher, trimming some of its early rise. The city-state's bourse is shut Thursday and Friday. Worries about inflation look likely to push interest rates up around the region, notably in Indonesia and Thailand, leaving investors concerned about the impact on banks' loan growth.
PT Bank Danamon, Indonesia's sixth-largest lender, fell 0.8 percent, although at one point it was down 2.5 percent. PT Bank Negara Indonesia, the fourth-biggest lender, ended unchanged after falling 2.3 percent. Dealers said expectations that Indonesia's central bank would now raise interest rates at a faster pace encouraged some investors, who felt inflation could be contained.
Most economists expect Bank Indonesia to raise its benchmark interest rate from a record low 6.5 percent soon, perhaps as early as Friday, to head off inflationary pressures. Not everyone thought inflation was the main reason for recent selling in Jakarta.
"Indonesia is not exactly unaccustomed to high inflation. I think the recent correction is driven by asset allocation into North Asia and using inflation as an excuse for some heavy profit-taking," said SooHai Lim, investment manager at Baring ASEAN Frontiers Fund.
"Markets got a little jittery wondering how far inflation would go without the central bank doing anything. With the CPI above 7 percent, it'll be helpful if they raise rates on Friday."
Indonesia gained small inflows of $23.9 million on the session, after a $442 million outflow in January when it racked up a loss of nearly 8 percent, Southeast Asia's worst. Other Southeast Asian bourses also performed worse in January than in December, in part because investors shifted from emerging markets with high valuations to less expensive, high-growth ones such as Taiwan.
Thai stocks ended 0.5 percent lower, erasing a 1 percent climb in early trade, and Philippine shares fell for a fifth session, ending down 1.3 percent. Energy-related shares gained across the region. Singapore palm oil stock Golden Agri-Resources rose 2.1 percent, Indonesian coal miner Adaro Energy jumped 6.7 percent and top Thai energy firm PTT added 0.9 percent. The risks associated with rising borrowing costs in response to high interest rates prompted selling in big Thai banks, led by a 4.4 percent drop in state-controlled Krung Thai Bank, the country's second-biggest lender.