Southeast Asian stocks fell on Wednesday with Singapore hitting a one-month low as Asian investors continued to worry over slowing global growth. With global stock markets under pressure and as the effects of central bank easing wear off, market players are turning to corporate earnings for signs of whether the year-to-date rally in equities can be sustained.
Singapore's Straits Times Index fell 0.6 percent, extending its losses this month to 2.5 percent. Indonesia's benchmark fell 0.6 percent while last year's top performer in the Philippines was down 0.9 percent. Malaysia fell 0.9 percent. Thailand's SET index, hovering near a 16-year high, was closed for a public holiday.
Broader Asia stocks outside Japan fell 0.9 percent further pressured by renewed concern over Greece's bailout and as high oil prices have raised fears that economic growth might slow. "In the absence of earnings upgrades, coupled with rising oil prices which pose risks to economic recovery, the market is likely to take a much needed breather," said Janice Chua, strategist at DBS Vickers in Singapore.
Of the 175 Singapore stocks tracked by Thomson Reuters Starmine, about 83 percent have reported 2011 earnings and just under half of those have missed analyst expectations. The liquidity-driven rally had pushed valuations back to normal levels, Chua said, removing a factor underpinning stock prices so far this year. Singapore's Straits Times index currently trades at about 13.5 times forward 12-month earnings forecasts, up from 12 times last December, according to Thomson Reuters I/B/E/S.
Financials, among the heaviest weighted sectors on benchmarks in the region, were under pressure. Overseas-Chinese Banking Corp dropped 1.4 percent and was the biggest drag on the Singapore benchmark, while rival United Overseas Bank Ltd fell 1.1 percent.
Banks were outperformers in Philippines relative to the broader benchmark, however, after brokerage Macquarie rated the country's banks among its preferred picks among Asia's financial stocks. Indonesian banks on the other hand, were among Macquarie's least preferred picks in the region, it said in a note. Indonesia, the world's best-performing emerging stock market over 2009-2011, has fallen out of favour this year as the case for piling more money into Southeast Asia's biggest and fastest-growing economy has weakened.
Bucking the broader weak trend in the region, airline stocks outperformed. Tiger Airways rose 4 percent after the budget carrier's Australian subsidiary received approval to operate a maximum of 64 sectors per day from October, up from 38 currently. Optimism on the sector lifted shares of Singapore Airlines 2.6 percent.