Most Southeast Asian stocks fall; Indonesia worst on the week

Most Southeast Asian stock markets fell on Friday, led by banks and commodity firms due to the grim outlook for the US economy and worries about Europe's debt crisis, but late buying in oversold markets helped erase some early losses. Slowing business activity in Germany, underscoring a loss of momentum in Europe's largest economy at a critical time for the eurozone and an expected dip in China's manufacturing sector for the third straight month added to investors' worries.
Thailand tumbled to end 3.3 percent down at a seven-month low, Singapore closed 0.8 percent weaker at its 16-month low, and the Philippines slumped 5.1 percent, its worst drop since January 2008, to an eight-month low. Malaysia shed 1.6 percent to its lowest in more than 13 months.
Indonesia bucked the trend to end with a 1.7 percent gain, recouping an early fall of 3.3 percent after it plunged nearly 9 percent on Thursday to record its worst performance since the 2008 financial crisis. "Unless drastic measures are taken in Europe to sufficiently comfort investors, this could be the beginning, and quite a long way from the end game," said Kenny Soejatman, fund manager at Jakarta-based Mandiri Management Invetasi, who manages over $2 billion.
"Locally, we need to see locals supporting the market as they did during previous market dips. Otherwise the contagion will spread further and for longer." Jakarta, which was the region's best performer last year and most of this year, was the worst performer in the region this week, plunging 10.7 percent. Manila slumped 9.4 percent, Bangkok 7.3 percent, Kuala Lumpur 4.54 percent and Singapore 3.2 percent.
Gina Nasution, a senior equity analyst at Jakarta-based Reliance Securities, said she expected the index to head as low as 3,100 by the end of month from 3,426.35 now. "Even though Europe is closing with positive remarks, we haven't got positive indications for the longer run," she said, adding worries over the weakening rupiah also weighed on stocks in Jakarta.
Yasmin Soulisa, an analyst at Bapindo Securities, said market heavyweights and bank shares were being bought back due to strong fundamentals. Analysts said local institutional investors were buying, taking the view the market was oversold after a fall of more than 10 percent in the first four days of the week. Jakarta ended in oversold territory on Thursday, with the 14-day relative strength index falling to 22.7 from the previous day's 35.3, Reuters data showed.
Except for Jakarta, volume was above the 30-day average in all markets, showing there had been a heavy sell-off. Increasing fears of recession in developed economies compelled foreigners to reduce their exposure in the region's emerging markets, despite relatively good economic fundamentals.
Tey Tze Ming, institutional sales manager at Singapore-based Saxo Capital Markets, said the sell-off was mainly due to shaken investor confidence and not fundamentals in the region, which has limited exposure to Europe's debt crisis. Indonesia suffered a foreign outflow of $68.8 million on Friday, extending the net foreign selling to $328.8 million on the week, the highest outflow since the first week of March, Thomson Reuters data showed.
Malaysia saw an outflow of $52.8 million on Friday to end the week with $139.5 in net foreign selling, while Thailand suffered an outflow of $236.1 million with Friday's selling of $102.1 million. The jittery markets in the region are now mostly trading in oversold territory, with 14-day relative strength indexes below the oversold level of 30.
In Bangkok, big-cap energy and banks led the overall market fall with top energy firm PTT falling 4 percent and Siam Commercial Bank losing 2.3 percent. Analysts said the Thai index had breached several resistance levels, dipping below 1,000 on Thursday.
The Philippine index fell 210.14 points to its lowest close since January 25, and it has now erased all its gains this year, giving a negative return of 7.5 percent, Thomson Reuters data showed. The Philippine bourse had attracted $806 million in inflows this year as of September 21 on top of $$835 million in 2010 and now foreign investors were selling to reduce exposure, Rodrigo said.