Southeast Asian stock markets fell on Tuesday as jitters about the US credit rating outlook limited appetite for risk and weak earnings hurt some shares, although foreign investors continued to buy in Indonesia and the Philippines. Volume was moderate to light as sluggish US manufacturing data worried markets already nervous about a possible downgrade of the AAA credit rating of the United States, even though a US debt deal is likely to be passed by the Senate later.
Despite the falls, many markets in the region held close to peaks set on Monday after news from the United States of the last-minute deal to escape default. Stocks in Singapore dropped 1.2 percent as Chinese shipbuilder COSCO Corp plunged 14.2 percent after it reported weak second-quarter earnings and warned about its outlook.
Other markets posted more limited losses, and even Singapore was still not far from four-month highs. Thai stocks were just below 15-year highs while Indonesia and the Philippines were just shy of all-time highs. The US worries and global economic uncertainties would stop Southeast Asian stocks from setting new highs, said Capital Nomura Securities analyst Wikij Tirawannarat in Bangkok.
"Thai market volatility may continue this week due to profit-taking in stocks looking pricey. The risk of a US credit rating downgrade will continue to drag down sentiment of both Thai and regional stocks," he said. Asian shares fell on Tuesday on concerns about the health of the global economy after sluggish US manufacturing data, while a strengthening yen prompted speculation that Tokyo may intervene in the markets to hold down the currency.
The MSCI's broadest measure of Asian shares outside Japan slipped 1.76 percent by 0908 GMT while the MSCI index of Southeast Asia fell 1.2 percent. Credit Suisse was cutting positions in ASEAN markets, citing high valuations, and was adding to North Asia, the broker said in a global emerging market equity strategy dated August 1. The broker said it was trimming its 'overweight' stance in both Indonesia - dropping Astra International and reducing its weighting in Indofood - and Thailand - trimming Siam Commercial Bank.
"While we continue to be bullish on Indonesia from a structural ROE perspective our concern on ASEAN is that it is currently more crowded than it was in August 2010," its research note said. Shares in Astra, Indonesia's top firm by value, eased 0.6 percent and Indofood, Indonesia's leading consumer firm, fell 1.6 percent. They had hit all-time highs in recent sessions as strong domestic consumption boosted profit outlooks. Thai lender Siam Commercial Bank lost 2 percent. It hit 14-year highs on Monday amid loan growth optimism.
The Thai market had racked up $1.41 billion in foreign inflows since the country's July 3 general election, as of Monday. Indonesia reported $81 million in inflows on Tuesday after $638 million from the start of July to Monday. The Philippines gained $11.9 million in inflows after taking in $4.4 million on Monday and $156 million last month, according to Thomson Reuters data. Among actively traded stocks on Tuesday, Singapore Airlines dropped 12.2 percent. It went ex-dividend but may also have been hit by brokers' sell calls or rating downgrades after disappointing quarterly result.
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