Southeast Asian stock markets fell on Monday with sharp falls in Malaysia and Singapore amid a selloff in Chinese stocks after weak factory activity data, and as economic numbers in the region still pointed to risks. Late selling hit regional bourses as trading in Chinese shares was halted after the index tumbled 7 percent, triggering a 'circuit breaker'. Kuala Lumpur's composite index ended down 2.3 percent and Singapore's Straits Times Index was 1.6 percent lower, both marking their biggest one-day decline since August 24.
Despite Singapore's surprisingly strong economic growth in the fourth quarter, risks remain on the horizon with potential capital flight that could result from further US rate hikes and/or fears of further deceleration in China, DBS Research said in a report.
Data released earlier in the day showed that operating conditions for Malaysian manufacturers continued to worsen in December. Stocks in Thailand, Indonesia and Vietnam posted their biggest daily loss in more than two weeks while the Philippines hit an over-two-week closing low. Fund flows were mixed, with the Philippines and Indonesia notching up net inflows worth 130 million peso ($2.76 million) and 84 billion rupiah ($6.04 million) respectively, while Malaysia posted a net outflow of 130 million ringgit ($29.94 million), stock exchange data showed.
Vietnam's benchmark VN Index fell nearly 1 percent in the first trading day of the year, with most shares losing ground, led by banks after a change in the dong/dollar rate policy. Analysts expect the change to have a negative impact on the stock market as it will raise risk for the Vietnam dong. The country's five out of six listed lenders fell, including Vietcombank, Vietnam's second-biggest company by market capitalisation, with a 1.59 percent loss, and Sacombank, down 3.82 percent.
STB shares tumbled due to negative outlook on the lender's situation after it merged with Phuong Nam Bank, analysts said. Foreign investors last year extended their net buying position, having bought a net 1.92 trillion dong ($8.54 billion) worth of Vietnamese shares, following a 2.84-trillion dong net buying in 2014, exchange data showed.