Southeast Asian stock markets drifted lower on Friday, weighed down by financial shares as worries about the European debt crisis prompted investors to cut holdings of riskier assets. Most markets extended their losses this week as investors held out little hope for a near-term resolution to the eurozone debt mess and worried about funding strains in Europe.
The global uncertainties have dashed hopes for strong economic growth in the emerging economies and favourable quarterly earnings from Southeast Asian companies have had little impact, brokers in the region said. "Domestic fundamentals are quite OK, but it would be hard to sustain because of what's happening abroad ... It might be more difficult because of weaker exports," said analyst Jose Vistan of AB Capital Securities Inc in Manila.
Leading the losers, Singapore's Straits Times Index ended down 1.72 percent to around a one-month low. It racked up losses for a third straight week, falling 1.8 percent, Southeast Asia's second-worst performance after Vietnam's 4.2 percent. Stocks in the Philippines and Indonesia both hit a one-week low, finishing down 1 percent and 0.7 percent respectively. Thailand edged down 0.9 percent, Malaysia eased 0.8 percent to two-week lows and Vietnam slid 1.6 percent to six-month lows.
The Philippine stock market posted $9.5 million in outflows on the day while the Malaysian bourse had 103 million ringgit ($33 million) in outflows, Thomson Reuters and stock exchange data showed. World stocks fell on Friday, extending an overnight slide, with renewed pressure on Spanish bonds reflecting fears the eurozone's debt crisis was spiralling out of control.
Banks fell across the region. Thai banks fell 1.6 percent because severe flooding has dented loan demand and the eurozone crisis has dampened sentiment in financial firms in general. Southeast Asia's biggest lender, DBS Group, lost 3 percent as Singapore's central bank warned banks of the risks of relying on financial markets to back their US dollar and other foreign currency loans in the current economic uncertainty.