South East Asian markets: inflows push most indices to new highs

Southeast Asian stock markets advanced on Friday, with Thai stocks scaling a 14-1/2 year peak and investors buying into the region's resource and bank shares to capitalise on strong oil prices and rising interest rates. Investors sought for beneficiaries of the rising inflationary environment as a sustained increase in the cost of oil put more upward pressure on prices, leading regional policy makers to raise interest rates.
The Thai benchmark SET index surged 1.6 percent to its highest since October 1996, topping its previous intraday 14-year peak set in early January. The market pulled back for rest of the first quarter as funds shifted to laggard stocks in developed markets. But the tables have since turned and the Thai market had $275 million inflows in Friday's session, the biggest since April 2006.
"We're seeing a build-up of foreign buy orders in Thai stocks after the underperformance in the first quarter. Flows should still hold within this region ahead of dividend pays in coming months," said Warut Siwasariyanon, head of research at broker Finansia Syrus Securities. Inflation in Thailand rose in March, reinforcing expectations of another interest rate rise this month, while Indonesia's annual inflation slowed to 6.65 percent in March, reducing the chances of the central bank hiking rates later in the month.
Inflation is generally expected to gather momentum for the remainder of this year on potential state cuts in subsidies as uncertainty in the Middle East raises risks of higher oil prices. MSCI's index of Asia-Pacific stocks outside Japan hit its highest level since May 2008 on optimism about global economic growth. It was up 0.86 percent at 0948 GMT.
Southeast Asia's gain came in strong volume, with turnovers for Malaysia, Thailand and Indonesia above 30-day averages. Most markets gained inflows, including Indonesia's $72 million and the Philippines' $23 million, Thomson Reuters data showed. Malaysia had $61 million inflows on the day, according to exchange data.
Singapore hovered at seven-week highs. Malaysia, Indonesia and the Philippines each was around multi-month highs. In Singapore, higher oil prices are expected to continue benefiting oil rig makers, with Keppel Corp rising 0.8 percent, and other offshore marine firms such as STX OSV, surging 5 percent. Thailand's biggest oil and gas firm PTT climbed 1 percent. Citigroup initiated its coverage of PTT at "buy", expecting the energy firm to benefit from the growth cycle of natural gas and petrochemical business. Thai number four Thai lender, Siam Commercial Bank, jumped 4.6 percent. Bank Central Asia, Indonesia's biggest lender by market value, gained 2 percent and Malaysia's CIMB Group rose 1.7 percent.