Major Southeast Asian stock markets retreated on Tuesday, giving up early gains as stagnant growth in European powerhouse Germany triggered risk aversion and prompted late selling in regional big-caps and financial stocks. Risk appetite appeared to be fading quickly as investors were less optimistic about regional growth on concerns about possible negative spillover of slack demand from the United States and Europe, which are plagued by public debt crises.
Weaker confidence hit more export-dependant markets, with late selling pulling stocks in Singapore 1.5 percent lower, with smaller losses for Indonesia, Thailand and Malaysia. Brokers are more optimistic on markets relying on domestic demand, with expectations that near-term fund outflows may have bottomed out, given strong fund outflows from developed markets of the past week.
Data from fund tracker EPFR for the week ending August 10 showed net outflows for developed markets of $19.4 billion, with emerging markets seeing net outflows of $7.4 billion, while emerging Asia net outflows stood at $4.9 billion. CIMB Securities has 'overweight' for Indonesia and Thailand, citing more resilient domestic demand and earnings outlook, albeit with caution about Eurozone risk.
"I think the risk remains on euro debt and the banking sector. The soft growth patch and euro concerns could continue to impinge on market sentiment near term," said regional strategist Chang Chiou Yi. By 1008 GMT, the MSCI index of Asia outside Japan was up 0.32 percent.
Singapore's cyclical stocks, which normally fall rapidly when growth slows down, erased early gains to fall, with oil rig maker Keppel Corp sliding 2.4 percent and Thai top oil firm PTT off 1.2 percent with global oil price falling. Singapore's top lender DBS Holdings and Thailand's biggest lender, Bangkok Bank, each lost around 1 percent, while Indonesia's largest lender Bank Mandiri fell 0.7 percent.
In Bangkok, investors looked for outperforming firms as the new Thai government pushed ahead with its pro-growth economic policy, with retailer Home Product Center hitting an all-time high, ending up 6.8 percent. Thai stocks saw a foreign outflow of $13 million and the Philippines, $2 million on Tuesday, while Indonesia posted just $1 million in inflows, according to Thomson Reuters and exchange data. Stocks in the Philippines and Vietnam, which traded half session, gained on the day as early Asian shares got a boost from Wall Street indexes on news that Google had offered to buy Motorola Mobility Holdings Inc for about $12.5 billion.
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