Most Southeast Asian stock markets closed lower on Friday on concerns over further policy tightening by China and persistent worries about Europe's debt crisis, but Indonesia and the Philippines continued to see significant inflows. Indonesia, the region's best performer in 2010, saw foreign inflows of $327.9 million foreign inflow, the highest daily net offshore buying this year, Reuters data showed.
But the overall Jakarta market fell 1 percent from a record high led by banking shares, which were volatile throughout the week, which analysts attributed to heavy local buying in small cap banks. The bourse has gained 48 percent so far this year. "The long term picture is stable and clear," said Harry Su, head of research at Jakarta-based Bahana Securities. "Everybody was in a selling idea due to concerns over Chinese officials raising interest rates and rating cut in Ireland. But I think those are short-term reactions," he said, referring to news that Fitch had become the first ratings agency to strip debt-stricken Ireland of its 'A' credit status.
After most Asian markets closed, China raised banks' required reserve requirements by another 50 basis points, which was widely expected. Some traders were also bracing for a possible interest rate rise as early as this weekend. Bank Internasional Indonesia, which was heavily traded in terms turnover, fell 3.6 percent, while small cap Bank CIMB Niaga lost 5.8 percent. The Philippines, which fell 1.8 percent to hit its lowest since December 1, enjoyed this year's highest daily foreign inflow of $406 million, Reuters data showed.
Investors have been generally upbeat on the region and analysts expect the outlook for Southeast Asian stock markets to remain positive for 2011, barring any global setbacks, though foreigners have been growing more cautious about valuations.
Indonesia is trading at 15.4 times this year projected earnings the highest in the region and compared to all-Asia's 13.2. Thailand, is trading at 12.5, lower than 14 of Singapore and Malaysia and 13.6 of the Philippines, Thomson Reuters StarMine data show. Singapore fell 0.8 percent on profit taking and Malaysia closed 0.9 percent weaker on concerns over possible rate hikes in China over the weekend.
"The market is preparing itself for more tightening measures from China," said Ng Kian Teck, an analyst at SIAS Research. Singapore and Indonesia saw low volumes of trade compared to their 90-day average. Vietnam bucked the trend with 2.7 percent rise to hit a four-month high. Thailand was closed for a holiday.
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