Most Southeast Asian stock markets were subdued on Friday, weighed down by reports of further chaos in the White House and fears that US tariffs could hurt the global economy and trigger a trade war. Broader Asian markets also dropped on concerns about the shake-up inside US President Donald Trump's administration and as next week's Federal Reserve policy meeting comes into focus.
Trump has decided to replace his national security adviser, H.R. McMaster, the Washington Post reported on Thursday. This follows the recent departure of two key officials, Secretary of State Rex Tillerson and top economic advisor Gary Cohn, from the Trump administration.
Adding to the political uncertainty, US Special Counsel Robert Mueller has subpoenaed the Trump Organization for documents, including some related to Russia, the New York Times reported on Thursday. "For the overall emerging markets, foreign investors have been selling off, which has led to further weakening of the local currencies," said Taye Shim, head of research at Mirae Asset Sekuritas.
"If you track down some of the recent developments ever since the resignation of Gary Cohn, there has been some market speculation that uncertainties are likely to prolong from here, so investors have been selling off, Indonesian equities especially." Indonesian shares dropped 0.3 percent on broad-based weakness.
Telekomunikasi Indonesia was the biggest drag with a drop of 2.8 percent. An index of the country's 45 most liquid stocks cut early falls to close 0.2 percent lower.
Large caps are favoured by foreigners due to their liquidity, Shim said, adding that the weakness was a case of "foreigners selling off what they have rather than an angle of valuations." Philippine shares recovered from a three-month low to close 0.6 percent higher.
The recovery towards the end of the day was due to bargain-hunting across the board, said Luis Limlingan, managing director of Manila-based brokerage firm Regina Capital Development Corp. Philippine shares dropped 1.6 percent this week, in their fourth straight weekly decline.
Malaysian shares edged up as gains in industrials outweighed weakness in consumer staples. Axiata Group Bhd rose 2.3 percent. Singapore shares slipped 0.2 percent, largely due to financials. Lender DBS Group Holdings Ltd dropped 1.3 percent. Thai shares were slightly lower, while Vietnam gained 1 percent on utilities and consumer staples. Petrovietnam Gas Joint Stock Corp rose 5.8 percent.