Some Southeast Asian stock markets retreated on Wednesday in cautious trade ahead of a US Federal Reserve meeting and resource shares pulled back due to volatility in global oil prices. The markets climbed to multi-week highs at one point, albeit in relatively light volume, amid hopes that Greece would avoid a debt default, which lured bargain-hunters back to beaten-down emerging equities.
However, stocks in Singapore, Thailand and Vietnam erased early gains and they posted small losses on the day. Philippine shares rose 0.8 percent, building on a 1.4 percent rise the previous session. Malaysia ended up 0.4 percent in a choppy session while Indonesia's main share index rose 0.7 percent to around two-week highs. "The Jakarta Composite Index strengthened as global markets are rallying after fear over the sovereign debt crisis facing Greece subsided and investors snapped up beaten-down stocks," said John Teja, director at broker Ciptadana Securities.
Southeast Asia reported mixed fund flows, with Indonesia gaining $61.5 million in inflows, the biggest in a week, Philippine shares posting a tiny $1 million in outflows and Thailand reporting nearly $20 million, reversing from $14.8 million in inflows on Tuesday.
Valuations of regional stocks have fallen by 2-5 percent this month, with the MSCI index of Singapore trading at 13.06 times forward price to earnings against 13.44 late last month, Thomson Reuters I/B/E/S data showed. Thai stocks had the biggest contraction of 5 percent. The MSCI index of Thailand trades at 10.75 times forward price to earnings against 11.32 in late May. The underperformance of Thai stocks was mainly due to rising political tension ahead of the general election on July 3, prompting Thai stock downgrades by a series of big foreign houses.
Among losers in the region, Thai energy firm PTT fell 1.2 percent, Singapore-listed commodities firm Noble Group eased 1 percent and Astra Agro Lestari, Indonesia's largest listed plantation firm, eased 0.6 percent. Also in Jakarta, Bumi Resources, Asia's biggest thermal coal exporter, jumped 3.2 percent as it expected coal sales and prices in the second quarter to be higher than in the first.