Most Southeast Asian stock markets gained ground on Monday, buoyed by commodities shares on optimism about the outlook for oil prices and for global demand. Strong buying interest bolstered the laggard Singapore stock market, pushing the benchmark Straits Times Index (STI) to a 34-month high before it closed nearly 2 percent higher.
Singapore shares have risen 13.9 percent this year, a far cry from over 40 percent gains by its smaller peers Indonesia, Thailand and the Philippines. Indonesian shares ended up 1.2 percent, marking a new all-time high, while Thai stocks rose 0.9 percent to their highest in over 14 years. The Philippines fell 1.2 percent, pausing after a surge to a record peak on Friday.
Malaysia rose 0.5 percent to its highest in 34 months while Vietnam inched down 0.03 percent, after climbing earlier to its highest in nearly three weeks. "We saw some profit taking in many markets and at the same time good demand for laggard markets such as Singapore along with its bigger peers like China and Hong Kong," said Kasem Prunratanamala, head of research at CIMB Securities (Thailand) Co Ltd.
Broker CIMB rated Thailand, Indonesia and Malaysia 'overweight' and Singapore 'neutral', with the region's economic resilience boding well to attract further inflows, he said. "In general, Asian equities will continue to go up due to the liquidity-driven phenomenon on the back of the US asset purchases to the middle of next year," he said.
By 0958 GMT, the broader MSCI Asia ex-Japan index eased 0.1 percent but was still a whisker from Friday's 2-1/2-year highs. Commodities shares outperformed across the markets, with Singapore-listed Indonesian palm oil firm Golden Agri-Resources surging 11.4 percent on expectations it may post strong earnings later this week on the recent rally in palm oil prices. Thai energy firm PTT Exploration and Production Pcl gained 2.1 percent to around 2-1/2 year high, buoyed by a positive outlook for oil prices, with US monetary easing also seen boosting demand in the world's top oil consumer.
Demand from domestic institutions played a larger role in supporting Thai stock prices. Buying interest was growing toward year-end on buying from long-term equity funds and retirement mutual funds, which offer tax breaks. "We see rising demand from local funds which had been on the sell side in the past four months and now they held excessive cash," he said.
Institutional investors bought a net 8.12 billion baht ($274 million) worth of Thai shares last week, exchange data showed, when the market rose 5.7 percent gain, Southeast Asia's best performer. The amount more than doubled the net foreign buying on the week, the exchange data showed.