Most Southeast Asian stock markets ended lower on Thursday after the US Federal Reserve hinted at a faster pace of tightening next year, with Singapore particularly hurt by telcos on fears of intensifying competition following the entry of a new player.
Although the US central bank raised interest rate by a quarter point as widely expected, investors had bet on a more dovish message in terms of its outlook and did not quite expect that the Fed would hint at three hikes in 2017, up from the earlier forecast of two.
"Markets had anticipated most of the Fed's move. It is the hint of an extra hike that has changed the game slightly, but that is not enough to create any major jitters," said Vaninder Singh, an economist with RBS in Singapore. The Fed decision sent the greenback soaring to its highest in nearly 14 years, while Asian shares and currencies struggled. Singapore shares closed 0.8 percent lower after posting their biggest intraday drop in a month, dragged down by telcos with StarHub Ltd being the worst performer.
Telecom stocks took a hit after the regulator announced the entry of Australian company TPG Telecom's unit, paving way for more competition. Philippine shares closed 1.1 percent lower, weighed down by financial and consumer non-cyclical stocks, while Malaysia ended in the negative turf, hurt by telcos and financials. Indonesian shares fell for a third straight session, little supported by a surge in November exports.
"Looking ahead, I think Indonesia is not a market that we are looking for in terms of exports-driven performance improvement. If it comes, it is cherry on the top," said Vaninder.
"But markets are now focused on domestic demand-driven improvement that Indonesia is expected to get in the next few quarters." Indonesia's central bank said in September that it hoped monetary loosening could help boost domestic demand. Bucking the trend, Vietnam shares ended marginally higher.
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