Southeast Asian stocks fell on Wednesday, as investors were cautious ahead of the European Central Bank's monetary policy meeting on Thursday, and Thai shares snapped six sessions of gains amid technical-led selling. The Thai SET index ended down 0.3 percent, after a rally of 4.8 percent since May 27, which sent its 14-day Relative Strength Index (RSI) to above 70 in the previous session, indicating shares were overbought. The RSI fell to 68.1 on Wednesday.
Profit-taking hit consumer and construction stocks such as Charoen Pokphand Foods and industrial conglomerate Siam Cement, which had hit a one-month high on Monday after broker CLSA's recommendation reflected some uplift in infrastructure spending. CLSA's global equity strategist Christopher Wood upgraded Thailand to 'overweight' from 'neutral' in the Asia Pacific ex-Japan relative-return portfolio, according to the CLSA Greed & Fear report dated June 1.
"It is based on the view that the probability for now is that the military will be successful in restoring a degree of temporary stability in the at least 15-month period that is likely to ensue before there is another poll," the report said. The Thai stock market saw net foreign buying worth 582 million baht ($17.81 million) on Wednesday, for a third straight session. Fund flows to the region were mixed. The Malaysian bourse reported net inflow of 38 million ringgit ($11.77 million) while the Philippine stock exchange reported net outflow of 423 million peso ($9.65 million). Asian shares stepped back from their recent highs on Wednesday ahead of expected easing from the European Central Bank. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent.
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