Southeast Asian shares fell on Friday and ended the week lower as bouts of heavy volatility continued to erode investor confidence across the globe. US markets remained the epicentre of the global sell-off, with the Dow plunging 4.1 percent and the S&P 500 sinking 3.7 percent overnight. Thursday's declines pushed markets into correction territory. However, S&P mini futures were up 0.6 percent in late Asian trading hours.
The past week has reinforced yet again the uncertainty inherent in today's highly correlated markets that can wipe out trillions of dollars in investor wealth in a flash. MSCI's broadest index of Asia-Pacific shares outside Japan slid 1.9 percent. Philippine shares closed Friday 1.6 percent lower, recording a weekly loss of 3.5 percent.
"The fall in the US markets precipitated the decline in the Philippine market as well as the regional market," said Manny Cruz, an analyst with Asiasec Equities Inc in Manila. Even though the Philippine central bank kept its benchmark interest rate steady on Thursday, real estate stocks were hit as investors anticipated that the apex bank will raise rates in the near future.
"Given the increase in January inflation, there is some worry that Bangko Sentral ng Pilipinas (BSP) will be compelled to hike rates, and this is the reason why you are seeing some selling in real estate stocks, especially blue-chip Ayala Land," added Cruz. Heavyweights Ayala Land and SM Prime Holdings Inc closed down 2.8 percent each. Malaysian shares dropped 1.1 percent, snapping ten weeks of gains, to close 2.7 percent lower for the week.
The country's industrial production rose 2.9 percent in December from a year earlier. Financials led the losses with CIMB Group Holdings Bhd closing 3.4 percent lower. Singapore shares reversed Thursday's gains to fall 1.1 percent, recording a fifth session of losses in six. United Overseas Bank and Keppel Corporation Ltd were among the top losers on the index, falling 1.1 percent and 3.2 percent, respectively. For the week, the city-state's equity markets shed 4.3 percent. Indonesian shares slid 0.6 percent and ended the week 1.9 percent lower.