Most Southeast Asian bourses fell on Wednesday as renewed debt worries in the eurozone hurt sentiment, with the initial buying spree in Thai stocks after last weekend's election stalling as the market waited for the formation of a new government. The sell-off came in light to moderate volume and was accompanied by modest capital inflows in some, including the Philippines and Vietnam.
-- Thai post-election rally stalls Moody's downgrade of Portugal's credit rating ate into appetite for risky assets across Asia. After the close, China raised interest rates for the third time this year. Speculation about a rise had hurt regional markets on Tuesday.
The Thai SET index dropped 1.1 percent to 1,072.68, with Singapore and others posting smaller losses. Bucking the trend, Malaysia's benchmark gained 0.6 percent to an all-time high of 1,591.34 amid buying in big caps, including palm plantation firm IOI Corp, which climbed nearly 1 percent.
Dealers in Bangkok said heavy profit-taking hit Thai stocks as the SET index approached psychological resistance at 1,100. Thai stocks had dipped 0.5 percent on Tuesday after a 4.7 percent surge on Monday. Investors opted to wait while the new government was being formed, brokers said. Phillip Securities still expected the SET index to head towards 1,100 and 1,130, topping a 15-year peak last hit in late April.
"Any dips caused by short-term profit-taking could still present an opportunity to accumulate shares. A close eye should be kept on news from the EU front in order to take prompt action in case the situation worsens," it said. By 0931 GMT, the MSCI index of Asia outside Japan was down 0.6 percent. The MSCI index of Southeast Asia was down 0.6 percent, led by a 1.9 percent drop in the MSCI index for Thailand.
Foreign investors bought a net $5.9 million of Thai shares on Wednesday. After the weekend election, which helped remove some political uncertainty, the market racked up $493 million in inflows on Monday and Tuesday. Indonesia saw a tiny $1.7 million in ouflows on Wednesday after $275 million in inflows over the previous five sessions. The Philippines gained $7 million inflows as the peso hit two-month highs on views that the country may use currency strength to fight inflation.
Across the region, big-caps led among losers. Singapore's DBS Group Holdings, Southeast Asia's biggest lender, dropped 1.6 percent and Indonesia's biggest firm by market value, Astra International, fell 1.8 percent. In Bangkok, big-cap banks and energy shares fell over 1 percent. Palm oil stocks were among bright spots because of positive Malaysian palm oil futures. Singapore-listed Golden Agri-Resources rose 0.7 percent and Wilmar International inched up 0.2 percent.