Most Southeast Asian stock markets fell on Tuesday as investors further cut positions in emerging equities, alarmed by growing inflationary pressures weighing on the region's large-capitalised stocks.
The exodus of funds has pulled most markets off last year's peaks with expectations of higher interest rates dampening future earnings of Southeast Asian firms.
Philippine shares, along with Indonesia and Thai stocks, now were among emerging equities underperformers, with the MSCI index of Philippine falling 8 percent this year, followed by MSCI Indonesia's 6.6 percent and MSCI Thailand's 4.3 percent.
That compared with a 2 percent fall in the MSCI emerging index this year as hopes of a sustained recovery for the world's rich nations encouraged investors to switch funds from emerging to developed markets.
Indonesia saw inflows of $25 million on Tuesday after a combined $18 million in outflows for the past two sessions. Some dealers said a favourable outlook for Southeast Asia's biggest economy was luring bargain hunters.
"I still believe the market weakness will be short-lived and as inflation peaks, the market will start to focus on its strong fundamentals and growth," said Jakarta-based John Teja, director at broker Ciptadana Securities.
"Indonesia's economy remains one of the strongest in terms fo growth in the region, with substantially better-than-expected output in the fourth quarter when real GDP grew by 6.9 percent year-on-year."
Most sharemarkets continued to see weak volume, with turnover in Indonesia and Thai stocks each falling to 0.77 times their 30-day average, followed by Vietnam's 0.54 times.
In Bangkok, growing political uncertainties kept market players at the sidelines. The benchmark Thai stock index edged 0.2 percent lower after moving in a tight range for most of the session.
The Thai government imposed a special security law in seven Bangkok districts on Tuesday ahead of planned protests by nationalist "yellow shirt" activists seeking to oust Prime Minister Abhisit Vejjajiva over a Thai-Cambodia dispute.
Foreign investors sold a net $45 million of Thai stocks on Tuesday, adding to a $97 million on Monday. That raised outflows of the Thai market to $1 billion this year, much larger than Indonesia's $396 million outflows and several others.
Singapore fell 0.2 percent to near a one-week low, with turnover of 1.07 times its 30-day average. Property shares fell on concerns over cooling measures in China to rein in stubbornly high housing prices, led by 3 percent drop in Keppel Land.
Bucking the trend, Malaysia climbed to a two-week high, in relatively active turnover of 1.1 times its 30-day average, while Vietnam rose 2 percent on resuming trade after market holidays since last week. Index heavyweights underperformed across the region, with Thailand's biggest firm PTT down 0.6 percent, Indonesia's top listed firm Astra International sliding 1.3 percent and Singapore's biggest lender DBS Group Holdings easing 0.4 percent.