Major Southeast Asian stock markets posted small losses on Monday, minimised by late bargain hunting in retail stocks that offset woes over a festering debt crisis in Europe and a grim economic outlook for the United States. Most regional sharemarkets recouped early losses after late buying in beaten-down consumer stocks, but signs that the US economy could slide back into recession raised fears of a steep global slowdown and potential its impact on local growth and earnings.
Singapore stocks ended nearly flat, picking up after slumping 1.9 percent fall at one point to its lowest since May 27. Stocks in Indonesia, Thailand and Malaysia rebounded from day lows to the lowest in more than one week. Some brokers were reviewing year-end targets of indexes in the region, taking into account lower optimism on regional growth.
Yasmin Soulisa, an analyst at Jakarta-based Bumi Bapindo Securities, said Indonesia would feel the pinch of the global slowdown, mostly because of its trade with China, and coal miners would take a hit.
"Indonesia is categorised as being among the least vulnerable countries in terms of the US economic crisis. However, as the US and the rest of the world slow down, it means trouble for China as their economy much depends on world demand," she said. Jittery Asian stocks surrendered early gains and turned lower on Monday, adding to last week's steep losses. Gold shot to new highs as investors worried about the sluggish US economic outlook and Europe's debt crisis.
Shares elsewhere in the region as measured by the MSCI Asia Pacific ex-Japan index fell 0.5 percent by 0929 GMT. Indonesia reported foreign outflows of $80 million on Monday, on top of $203 million on Friday while the Philippines had outflows of $19.2 million, after $11.5 million outflow on Friday, Thomson Reuters data showed. In Bangkok, foreign investors appeared to shift funds to domestic bonds with medium- to long-term tenor, partly in response to worse-than-expected second-quarter GDP data, a bond dealer said.
Thailand's state planning agency revised downwards the top end of its forecast growth range for 2011, clouding the outlook for interest rates after an expected increase this week. Economists generally still expect the Thai central bank to raise its policy rate to 3.50 percent from 3.25 percent on Wednesday, which would be the ninth increase since July last year. Among actively-traded stocks, Indonesia's coal miner Bumi Resources fell 3.7 percent, partly as concerns about demand from China for commodities dimmed its outlook.
Indonesia's main auto distributor Astra International gained 2.5 percent. In Bangkok, a fall in Brent crude helped trigger selling in Thailand's biggest energy firm PTT but hopes about a pro-growth policy of the new government lured buying in banks, with Siam Commercial Bank edging up 0.4 percent.
Singapore cellphone company Singapore Telecommunications gained 1.4 percent, reversing an early fall, while United Overseas Bank fell 1.8 percent and DBS Group Holdings eased 1.1 percent. Broker Kim Eng Securities downgraded DBS and United Overseas Bank to "sell", citing a looming threat of a global economic slowdown and a potential double blow in the form of stagnating loan growth and pressure on net interest margin.