Indonesian and Philippine stocks on Friday rose on optimistic earnings expectations in the financial sector, while Malaysian stocks were under pressure after a warning of a US credit rating downgrade by Standard & Poor's hurt industrial shares. South East Asian stock market activity was subdued with trading volumes in markets below their 30-day moving averages.
Worries about a potential debt default in developed economies kept investors' appetite for riskier assets at bay, Asia's relatively robust earnings outlook may keep attracting capital flows, analysts said. Foreign investors bought a net $25.0 million in Indonesian stocks on Friday, exceeding the 55-day moving average of net flows at $19.3 million, according to Thomson Reuters data. Foreigners also purchased a net $10.8 million in Manila shares, above a 55-day moving average of $8.0 million.
Investors sought companies with high dividend yields and expected to release strong earnings as the reporting season gets under way this month, brokers in the region have said. That helped the south-east Asian stocks to outperform other Asian markets on the week.
The MSCI index of Southeast Asia fell for the week, but less than the MSCI index of shares for ex-Japan. As of 0900 GMT, the former lost 1.07 percent from last Friday while the latter has fallen 3.14 percent. Indonesian stocks hit a record high with the sub-index for the country's financial sector up 1.00 percent. Bank Mandiri, Indonesia's largest lender, gained 1.28 percent.
Manila stocks also were supported by banks and financial firms. The financial sector sub-index outpaced the overall market, gaining 1.05 percent. Metropolitan Bank & Trust Co, the Philippines' second-biggest lender by assets, jumped as much as 3.4 percent to 79.55 pesos a share, the highest since November last year. Malaysian stocks ended down 0.16 percent led by falls in industrial names, while Singapore shares dipped.
Still, south-east Asian stocks are not free from risk-off mode on worries about the global economic slowdown and fiscal problems in the eurozone and the United States, analysts said. "In SE Asia, it is earnings season and we could see some stocks surprising on upside, especially resource owners and commodity names, but the macro trend seems to be generally headed lower," said Tey Tze Ming, Market Strategist for Saxo Capital Markets in Singapore.