Indonesia's stock market fell nearly 3 percent to a two-week low on Tuesday, retreating from a recent record high as higher-than-expected inflation for July raised fears of an interest rate rise, sparking profit-taking. The central bank has said it would not raise rates this year but investors are worried it may be obliged to do so after annual inflation hit a 15-month high in July, going above the central bank's target for the end of the year.
Indonesia's main share index, Asia's second-best performer this year, finished down 2.8 percent and foreigners sold a net $66 million of stock, the heaviest selling since May 21. The market attracted inflows of $527 million in July. The Jakarta rally, which took the index to a record high last week, came as big-caps announced better-than-expected quarterly results and a positive economic outlook pointed to strong earnings for the rest of the year.
Indonesia's third-biggest lender, PT Bank Central Asia, fell 3.4 percent while PT Telekomunikasi Indonesia, the state telecoms firm, lost 4.8 percent. Other Southeast Asian stock markets failed to sustain early gains. Singapore lost 0.3 percent, reversing early gains to a 2010 high despite healthy corporate earnings and confidence the economy would be supported over the rest of the year. Malaysia was flat, coming off a 2-1/2-year intraday peak, Thailand edged up 0.15 percent, climbing at one point to a 26-month intraday high and Vietnam was unchanged, but the Philippines rose 0.8 percent to its highest in 32 months.