Southeast Asian stock markets fell on Thursday, fretting over the potential impact of the spike in global energy costs on economic growth, with airlines coming under particular pressure but palm oil and bank stocks also hit. Markets gave up early gains as Brent oil surged more than 7.5 percent to its highest since August 2008.
Thailand's SET index fell 1.4 percent, reversing an early gain to end at the day's low, although shares in upstream energy companies including PTT Exploration and Production saw good demand. "The Thai market retreated as investors got up to sell and sat back down to monitor the oil price moves," said Pichai Lertsupongkij, head of investment advisory at broker Thanachart Securities.
"Judging from the Thai market volume today, we don't think that reflected a panicky situation. Investors just turned a little more cautious," he said. Turnover was 1.15 times the 30-day average, similar to other markets. And foreigners were buyers: the stock exchange recorded inflows of $36.54 million on the day.
Other stock markets finished around their day's lows. Singapore's stock index lost nearly 1 percent, at one point hitting the lowest in six months, and Malaysia fell 1.4 percent to the lowest in almost three months. Indonesia fell 1 percent. Airline companies pulled back further amid concerns over the rise in fuel costs, led by a 5 percent drop in Malaysia's AirAsia and a 4.6 percent fall in the Philippines' Cebu Air.
Unrest in Libya and the threat of contagion to other oil producers in the region drove crude higher and hurt sentiment across Asian stocks. The MSCI index of Asia Pacific stocks outside Japan fell 1.2 percent. Fund flows in the region were mixed, with the Philippines and Vietnam also seeing modest inflows while Indonesia suffered outflows for a second day, Thomson Reuters data showed.
Malaysia reported $107 million in outflows on the day, exchange data showed. Regional palm plantation firms dropped in line with Malaysian palm oil futures on concern about slower global economic growth, with Malaysia's IOI Corp shedding 1 percent and Indonesia's Astra Agro Lestari dropping 2.3 percent. The outlook for Southeast Asian stock markets remains weak in general as the rise in oil prices adds to worries about inflation and costs at listed firms.
The emerging stock markets of Southeast Asia are among the worst global performers this year as foreigners have sold. In an effort to attract more funds, stock exchanges in Malaysia, the Philippines, Singapore and Thailand are keen to set up trading links between their markets to help liquidity.