Southeast Asian stock markets pushed higher on Tuesday, with Indonesia and Thailand surging nearly 5 percent because of hopes that European policymakers will act to contain Greece's debt problems and resolve the eurozone debt crisis. Buying gained steam during the afternoon as European shares rose for a third straight session, although brokers said the rise in Asia owed more to short-covering than new buying as many investors remained worried about the risk of global recession.
If the eurozone's problems persisted, that could drag global markets lower again, including Southeast Asian stocks despite the fall in their valuations. "We admittedly are looking at a gloomier global outlook, so market valuations do not yet indicate a screaming buy," said CIMB Research regional strategist Chang Chiou Yi.
The Asian markets finished at their day's highs, with Indonesia's main share index ending up 4.8 percent, reversing Monday's 3.2 percent loss. Thai stocks gained 4.7 percent, erasing part of the previous session's 5.7 percent loss. Stocks in Singapore and Malaysia gained over 2 percent. Vietnam rose 0.7 percent. The Philippine market was shut because of Typhoon Nesat.
Trading volume was generally moderate, around the monthly average. Yasmin Soulisa, an analyst at Bapindo Bumi Sekuritas in Jakarta, said Indonesia's rebound was due to the positive news flow from the euro zone, with foreign fund managers pausing in their withdrawal of funds from emerging markets. "The market's gain is temporary. In the longer run, it's still uncertain," she said.
Asian shares elsewhere jumped and MSCI's broadest index of Asia Pacific shares outside Japan had risen 5.1 percent by 0846 GMT. Southeast Asian shares have plunged more than 10 percent from highs hit in July and August amid turbulence on global markets due to fears of renewed recession in the United States and Europe's sovereign debt crisis.
Markets that had seen strong foreign inflows such as Thailand and Indonesia saw a sharp reversal, their indexes losing 17-18 percent from the highs set in early August. According to Thomson Reuters Datastream, MSCI Thailand now carries a 12-month forward price-to-earnings ratio of 9.9, falling from around 11.5 in early August. MSCI Indonesia carries a ratio of 13 against 14.5 in early August.
Indonesia's second-largest coal miner, Adaro Energy, surged 7.2 percent after Monday's 7.9 percent drop. Thai coal miner Banpu jumped 6.8 percent, partly reversing a 10.2 percent loss on Monday. Singaporean bank DBS Group Holdings, which fell 2.3 percent on Monday, rose 3.5 percent. Indonesia gained $5 million in foreign inflows and Malaysia 75.6 million ringgit ($23.8 million), according to Thomson Reuters and stock exchange data.
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