Major Southeast Asian stock markets closed flat to weaker in thin volume on Tuesday, led by Thailand, which hits its lowest in more than two months as fears over US growth and Europe's debt crisis led investors to cut holdings in the region. Thailand fell for the fifth straight session, with net foreign selling of $125.5 million. It shed 1.1 percent but volume continued low at just 0.77 times its 30-day average. Banks led the fall.
"A continued foreign portfolio rebalancing lately, and particularly the recommendation today to 'underweight' Thailand from Goldman Sachs, caused the market to be dull," said Teerada Charnyingyong, senior strategist at broker Phillip Securities. "The biggest concern at the moment would be on the external front, such as a US economic slowdown and the EU debt crisis. Nonetheless, internal fears about election violence or inflation also remain."
Charnyingyong said the market may see some short-lived rebound, but that the broad trend would be lower. Analysts expect lower demand for lending in a slow-growth period and that, along with a technical drop, resulted in foreign selling of bank shares after the main index fell through technical support at 1,050 on Monday. The Thai banking subindex fell 2.5 percent to its lowest in nearly three months, with top lender Bangkok Bank , third-ranked Kasikornbank and fourth-largest Commercial Bank all losing more than 2.2 percent.
The Philippines lost 0.5 percent, its third straight fall, to hit a near-two-week low with $3.3 million in foreign outflow, while Malaysia ended a tad weaker after trading in a narrow range as $26.2 million of foreign money flowed in. Asian stocks outside Japan were down 0.27 percent by 1030 GMT, while the MSCI index for Southeast Asia was down 0.14 percent.
Indonesia, the region's best performer so far this year, and Singapore recovered to end 0.2 percent and 0.1 percent higher respectively in fairly high volume after being in negative territory for the most of the day. Jakarta saw an outflow of $44.2 million on Tuesday. "Market sentiment is expected to continue positive until the end of this week although with volume on the light side," said John Teja, director of Ciptadana Securities in Jakarta, adding that investors were focusing on Thursday's central bank policy meeting, when rates expected to be left unchanged.