Indonesian shares retreated on Wednesday on renewed political concerns while most Southeast Asian stock indexes hovered near oversold territory as investors cut holdings in risk assets amid concerns about weaker global growth outlook. Jakarta's composite index dropped 1.5 percent, almost erasing gain of 1.7 percent made over the past two trading days.
Foreign selling hit large caps such as Bank Mandiri and Telkom Indonesia amid a fall in the rupiah. The selling in shares came after the chairman's seat in the Indonesian upper house was won by the opposition early on Wednesday, highlighting the weakness of Joko Widodo's coalition.
Last week, the opposition also won the vote for the head of the parliament position. The market expects the coalition's failure to win the two positions could jeopardise Joko Widodo's reform agenda and be an obstacle to his Indonesia growth agenda, said Andri Zakarias, an analyst with BNI Securities in Jakarta. The International Monetary Fund cut its global economic growth forecasts for the third time this year on Tuesday, denting sentiment across Asia.
Singapore's index closed at the lowest since late May, with its 14-day Relative Strength Index (RSI) at 30.9, near the oversold level of 30 or below. Malaysia's index hit the lowest close since late March, with the 14-day RSI at 29.5. The Thai SET index edged slightly higher. Shares of Thai Airways International led the pack after a newspaper reported the airline would post a loss in the third quarter but return to profit in the fourth quarter.
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