Most Southeast Asian stock markets fell on Thursday (26/04) as a strong dollar and climbing US treasury yields saw investors unwinding greenback-denominated carry trades, while Indonesia slipped for a fifth straight session to levels unseen since October.
The Jakarta index fell as much as 2.1 percent as foreign outflows continued to hurt the rupiah, which has been depreciating since last week.
The Indonesian rupiah yield curve's sharp flattening suggests a build-up of rate-hike expectations, Standard Chartered said in a note.
Financials faltered, with Bank Central Asia falling as much as 2 percent and Bank Mandiri hitting a six-month low. The country's index of 45 most liquid stocks was down 2 percent.
"It's a tricky situation for the government and the central bank as they have to contemplate whether to focus on growth or stability," said Taye Shim, head of research at Mirae Asset Sekuritas.
Investors are reducing US dollar-funded carry trades in emerging markets after a broad rally of the benchmark currency and a subsequent spike in treasury yields dented equity risk premium.
Benchmark US Treasury 10-year yield edged above 3 percent on Wednesday and may likely reach levels last seen in mid-2011.
Singapore shares were trading flat. Telecom stocks such as index heavyweight Singapore Telecommunications gained while tech and financial stocks edged lower.
Philippine stocks were down marginally as gains in real estate sector were offset by losses in financials. Metropolitan Bank and Trust Co, down as much as 2 percent, was the biggest drag on the index.
Malaysian stocks were trading slightly higher while Vietnam shed 1.1 percent and Thai shares were marginally down.