Southeast Asian stock markets retreated on Monday as investors cashed in gains in financials and big-caps after weak global economic data, including poor US job figures, with caution ahead of interest rate decisions in Indonesia and Thailand underpinning the trend. Volume was generally low. Indonesia, Malaysia and the Philippines all saw turnover fall short of their 30-day average.
Stocks in Malaysia edged down 0.4 percent after climbing at one point to all-time highs. Indonesia and the Philippines, which set record highs last week, drifted lower on the day. Singapore fell 1.1 percent and Thai shares dropped 1.03 percent. The Thai market surged 4.5 percent last week and was Southeast Asia's best performer, helped by the initial reaction to a landslide election win by the opposition Puea Thai Party, which removed some political uncertainty.
The Bank of Thailand may raise interest rates on Wednesday by 25 basis points from 3.0 percent to tame inflation while Bank Indonesia will probably leave its policy rate on hold at 6.75 percent on Tuesday, with June inflation within target. In Bangkok, investors also awaited the formation of a new government and details of key economic policies, with the market concerned that some will push up inflation.
"Bearish external factors hit sentiment in this region. For Thai stocks, it's also an excuse to take profits," said strategist Sukit Udomsirikul at broker SCB Securities. "The Thai market is in a 'wait-and-see' mode for details of new government policies. There may be some selective buying in the quarterly earnings season," he said. Foreign investors sold Thai shares worth a net $11.8 million on Monday after $477 million in inflows last week, the exchange said.
Indonesia, Asia's best performer this year, gained $7.3 million in inflows on Monday, adding to a net $363 million last week, while Manila reported $2 million in outflows on the day, according to Thomson Reuters data. By 1024 GMT, the MSCI index of Asian shares outside Japan was off 1.5 percent, while the MSCI index of Southeast Asia fell 0.95 percent, led by a 1.4 percent drop in MSCI Thailand.
The region appeared pricey compared with the rest of Asia. The MSCI Indonesia index trades at 13.4 times forward price to earnings, 32 percent above its 10-year average. The MSCI Asia ex Japan index trades at 11.28 times forward price to earnings, a 12 percent discount to its 10-year average, according to Thomson Reuters Datastream.
Among losers, Singapore's DBS Group Holdings, Southeast Asia's biggest bank by market value, fell 0.6 percent. The stock climbed to a one-month high last week in part due to buying ahead of second-quarter earnings this month. Malaysian financial firm CIMB Group dropped 1.1 percent after three days of gains, Philippine Energy Development eased 1.3 percent after setting a record high on Friday and Thai convenience store chain CP All fell 2.6 percent, also coming off a record high set on Friday.