The Stock Exchange of Thailand index drops more than 1% to a three-week closing low on Tuesday. (Bangkok Post photo)
The Stock Exchange of Thailand dropped to a three-week closing low on Tuesday, while while Indonesian stocks fell nearly 2% to their lowest close in nine months.
The SET main index shredded 19.55 points or 1.10% to close at 1,760.25, in trade worth 61 billion baht.
The index declined to a three-week closing low, weighed by energy stocks. PTT Plc, PTT Exploration and Production Plc and PTT Global Chemical Plc fell between 2.2% and 4.7%.
Indonesian shares fell for a third session in four, a day after data showed the country’s economic growth slowed slightly in the first quarter, pressuring the currency.
The rupiah extended its fall and hit the lowest since December 2015 on Tuesday.
The tepid growth rate could put the central bank in a bind at its May 16-17 policy meeting. Its governor has said the bank could raise rates to halt further rupiah depreciation if that threatened the inflation target or financial stability.
“Sluggish growth could limit Bank Indonesia’s ability to lift interest rate to restore financial stability,” Mizuho Bank said in a note.
Telekomunikasi Indonesia was the biggest drag on the index with a fall of 4.7%. An index of Indonesia’s 45 most liquid stocks closed 2.2% lower.
Malaysian Prime Minister Najib Razak and his ruling Barisan Nasional coalition face their toughest general election yet on Wednesday with an unprecedented challenge from Mahathir Mohamad, Najib’s former mentor turned opposition leader.
The ringgit was near a four-month low on Tuesday.
Anything other than improved Barisan Nasional standings pose significant downside risks to the currency, said Mizuho Bank.
Financials led the gains on the Malaysian stock index with CIMB and Malayan Banking being the biggest boosts.
Malaysian financial markets will be closed on Wednesday for the elections.
Higher Treasury yields and pressured oil prices were other factors impacting emerging markets.
“With improving fundamentals, we think extended positioning amid higher US Treasury yields and US dollar were the main drivers (of losses),” Morgan Stanley said in a note.
Oil prices fell slightly on Tuesday, a day after hitting 3-1/2-year highs, as investors awaited US President Donald Trump’s decision on whether to withdraw the United States from the Iran nuclear deal, a move that could disrupt global oil supply.
If Trump pulls the United Sates out of the Iran deal, the heightened geopolitical tension could push up oil prices which would negatively impact currencies of net oil-importing countries such as Indonesia and the Philippines, said Christopher Wong, a senior forex strategist at Maybank.