Southeast Asian stock markets rose on Friday amid optimism about the US economic recovery and a decision by Indonesia to maintain interest rates boosted big-cap banks, pushing its market index to a five-week high. "Banking stocks had already anticipated it as all of them rallied this morning ... It's a good story for them since they are not under pressure to increase lending rates," said Ikhsan Binarto, equities analyst at Indopremier Securities in Jakarta.
"I think earning reports by the big caps in coming weeks will help the market regain its bullish trend after a bad performance over the last two months." Most other market rose for a second day, albeit in fairly weak volume. Market players are cautious about developments in the oil market, and the potential impact on inflation, as fighting in Libya intensified. Brent oil rose near to $116 on Friday.
Indonesia's main index ended 1.4 percent higher on the day and up 2.9 percent on the week, Southeast Asia's second best performance behind the Philippines' 3.9 percent gain for the week. The export-dependent region is pinning its hopes on US February non-farm payrolls later in the day, with employment expected to have increased by 185,000, which might indicate a sustainable economic recovery is taking root.
Most indexes were around multi-week highs, with Singapore edging up 0.8 percent, Malaysia 1 percent, Thailand almost 1 percent and the Philippines up 1.3 percent. Vietnam pushed 1.5 percent higher, erasing part of a 2.98 percent loss in the previous two sessions. Turnover in Thailand, Singapore and Vietnam was at 0.9 times the 30-day average, with Malaysia and Indonesia around average.
Central banks in the region are in a tightening cycle as consumer prices are rising but the pace will depend on how fast prices rise and whether economic growth slows further, especially as energy costs rise. The Bank of Thailand is expected to raise rates again next Wednesday after four increases since July 2010, while the Philippines may finally raise rates this month after inflation came out higher than expected, and Singapore is likely to tighten again in April.
In Jakarta, PT Bank Mandiri, Indonesia's largest lender, surged 5.1 percent and PT Bank Rakyat Indonesia, the second biggest, jumped 6.6 percent. In Singapore, developer Hongkong Land jumped 3.8 percent after it reported strong annual earnings but commodity trading firm Noble Group fell 2.3 percent after it said it had entered into a share placement agreement.