Indonesian shares set an all-time high on Tuesday, helped by demand for coal miners, but the region turned generally cautious, worrying that any sustained US dollar rebound may cap demand for Asian risk assets. Thai stocks eased 0.2 percent after an early climb to a more-than-14-year high. The Philippine index fell 0.7 percent to a one-week low and Vietnam dropped 1.7 percent.
-- Malaysia at 34-month high
-- Thai stocks hit 14-year high then slip lower
Manila's rise to a record high last week has come to an end as the Philippine peso has fallen, with some traders believing the central bank was trying to squeeze the currency lower to deter inflows after the Federal Reserve's latest round of quantitative easing. Renewed concern about high sovereign debt in the eurozone helped to provide further reprieve for the US dollar and prompted some selling in stocks across Asia.
The MSCI index of Asia Pacific shares outside Japan eased 0.3 percent by 0939 GMT, moving off a two-year high hit last week, with MSCI Thailand among underperformers, down 1.2 percent. Despite the pull-back, the MSCI index of Thailand has racked up a gain of 40.8 percent this year, far outpacing a 16.2 percent rise in MSCI Asia Pacific outside Japan, on the back of the country's economic resilience.
According to a report on Tuesday, the Organisation for Economic Co-operation and Development (OECD) is forecasting 7 percent growth for Thailand in 2010, broadly in line with the authorities' forecast. Indonesia's main share index finished up 1.03 percent, with coal producer PT Bumi Resources rising 2 percent and Adaro Energy surging 6.4 percent.
Singapore's main index and Malaysia each gained around 0.4 percent to their highest level in around 34 months. In Kuala Lumpur, buying interest shifted to financials, with top lender Malayan Banking Bhd rising over 2 percent, while palm oil firm IOI Corp Bhd fell 0.5 percent after hitting a two-year high on Monday.
Nomura International (Hong Kong) Limited said it was bullish on Malaysia. "Malaysian equities are entering a sweet spot as terms of trade turn positive on firming commodity prices and excess liquidity moves into financial assets," Sean Darby said in a research note. In Bangkok, weaker global oil prices pulled heavily weighted energy shares lower, with PTT Pcl down 1.2 percent and PTT Exploration and Production Pcl falling 0.9 percent. The two energy firms weigh nearly 20 percent in the main index.
However, the market consolidation was expected to be cushioned by demand from domestic institutions, buying for retirement mutual funds and long-term equity funds that offer tax breaks, dealers said.