Most Southeast Asian stock markets fell on Thursday (24/11) as upbeat US economic data raised the probability of a rate hike in December. (ID Photo/David Gita Roza)

Most SE Asia Stocks Fall on Fed Rate Hike Chances, Indonesia Down 2%


NOVEMBER 24, 2016

Most Southeast Asian stock markets fell on Thursday (24/11) as upbeat US economic data raised the probability of a rate hike in December.

Indonesian shares led the fall with a drop of 2 percent as the rupiah weakened to a near six-month low on foreign investor selling. "For every 1 percent depreciation in the rupiah, the market ETF growth will come down by about 0.9 percent," said Harry Su, an analyst with Bahana Securities in Indonesia, adding: "So, a stronger dollar is definitely bad for the market."

"We expect the index [Jakarta Composite Index] to be potentially under pressure amid lack of supporting catalysts and pressure on the rupiah," Samuel Sekuritas said in a note.

The JCI snapped two sessions of gains, dragged down by financials with index heavyweight Bank Mandiri shedding 7.3 percent.

Most Asian stock markets also fell on prospects of higher US interest rates, while the dollar's bull run continued with US bond yields propelled to multi-year highs.

New orders for US manufactured capital goods rebounded in October, the latest indication of an acceleration in economic growth early in the fourth quarter. Consumer sentiment also jumped in November in the wake of Donald Trump's election as the US president.

Minutes from the Fed's Nov.1-2 meeting, released on Wednesday, showed policymakers were confident that a strengthening economy was enough to warrant a rate hike soon.

The Fed meeting shows a 100 percent chance of a rate hike next month, said Joseph Roxas, an analyst at Manila-based Eagle Equities.

The rate increase and a better economy are starting to bring money back to the US market and that money is probably coming from emerging markets such as the Philippines and the rest of Asia, he said.

Vietnam snapped three sessions of gains, with industrials leading the losses, while Malaysia closed marginally lower after rising for three sessions. Bucking the trend, Singapore and Philippines recouped early losses to end marginally higher.