Indonesian stocks jumped 2.7 percent on Thursday, the most since August 2016, while Malaysian shares fell for a fourth straight session as a widening probe over corruption linked to the previous government and continued capital outflows weighed on investor sentiment. Financials accounted for most of the gains in Indonesia with Unilever Indonesia rising 3.7 percent and Bank Central Asia climbing 2.1 percent.
Movements in financials were valuation-driven, said Nomura Indonesia analyst Elvira Tjandrawinata. There has been little downgrade in terms of earnings but valuation has come down because of receding share prices, she said. The financial subindex trades at price to current fiscal year's earnings ratio of 13.47, compared with last one year's average of 14.87.
Reports that the government plans to disburse a higher Eid holiday bonus are also likely to push the Jakarta stock index higher, Trimegah Securities said in a note. Malaysian shares fell 1.6 percent to their lowest close since December 27, dragged by financials. Malayan Banking Bhd was the biggest drag with a drop of 3.9 percent.
"The political malaise is weakening MYR (ringgit) and that usually triggers some outflows. But I also believe the local markets are caught up in risk aversion," said Stephen Innes, head of trading APAC at Oanda. Finance Minister Lim Guan Eng had said earlier this week that the previous government led by Najib Razak deceived the public and parliament over the country's financial situation and 1MDB.
Philippine shares snapped six straight sessions of fall to close 1.2 percent higher, while Singapore stocks rose nearly 1 percent. Lenders Oversea-Chinese Banking Corp and DBS Group Holdings were the top boost in Singapore, rising 1.6 percent and 0.8 percent, respectively.
Thai shares declined 1.2 percent, dragged by energy stocks. PTT PCL ended 5.1 percent lower and PTT Exploration and Production fell 3.1 percent with crude oil prices declining on the prospect of the first increase in Opec output since 2016.
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