Major Southeast Asian stock markets edged higher on Thursday as a surge in global oil prices revived demand for shares in energy and related sectors, and Singapore outperformed after a raised GDP forecast triggered a broad market rally. Trading volumes were generally moderate, with equities players still put off by predictions of rising inflation and tighter monetary policy as economies continued to grow.
Singapore's Straits Times Index rose 1 percent, with markets in Indonesia and Malaysia posting smaller gains. Thai stocks inched up 0.15 percent, erasing most of their early gains as investors took profits, with one eye on political risks ahead of a general election on July 3.
"Foreign investors have slowed down their investment as they want to wait and see the outcome of the election," said Paiboon Nalinthrangkurn, chief executive of broker Tisco Securities. The Thai market, Asia's second-best performer this year after Indonesia, saw $130 million in foreign selling on Wednesday, the biggest in four months, taking net outflows over three sessions to $229 million, exchange data showed. There was a small inflow on Thursday.
The MSCI index of Southeast Asia was up 0.57 percent and MSCI's index of Asia Pacific shares outside Japan had risen 0.33 percent by 0939 GMT. The dollar slipped on Thursday, with funds sensing a rally this month was ending and expectations increasing that commodity prices would resume their rise, pushing up equities in Asia's energy and materials sectors.
Investors have been struggling to find a common theme in financial markets after two routs in commodities over the past two weeks led to a reduction in risky assets in portfolios. Economic data out of the United States and China also sent mixed signals. Big-caps outperformed in Singapore, led by a 1.9 percent rise in Singapore Telecommunications, Southeast Asia's biggest telecom firm, while Keppel Corp, the world's largest oil rig builder, gained 1.1 percent.
Singapore raised its forecast for GDP growth this year to 5-7 percent from 4-6 percent and said domestic cost pressures remained a concern due to increased economic activity and a tight labour market. Central banks in the region, including Malaysia and Thailand, are widely expected to keep their hawkish stance against inflation given underlying price pressures and strong momentum of domestic demand.
Energy and resource-related shares led gainers across the region, with top Thai energy firm PTT up 1.1 percent, Indonesia's no. 3 coal miner, Indo Tambangraya Megah, up 3.1 percent, and Malaysia's national power producer, Tenaga Nasional, up 2.1 percent. Bucking the trend, Vietnam fell for the sixth day, sinking 2.2 percent to the lowest in almost six months.