Southeast Asian stock markets fell on Monday amid prospects of an earlier-than-expected rate hike in the United States, with Indonesia retreating from a record closing high hit in the previous session in line with a depreciating rupiah.
Asian stocks buckled, while the dollar held firm after strong US jobs data fanned expectations that the US Federal Reserve may raise interest rates sooner than previously thought.
The Jakarta composite index dropped 1.3 per cent after Friday’s 1.2 per cent gain to a record closing high of 5,514.79. The Indonesian rupiah hit a near 17-year trough as emerging Asian currencies lost ground.
Broker Bahana Securities has cut its rating on the stock market to “neutral’’, citing the rupiah’s depreciation. For every 1 per cent rupiah depreciation against the dollar, the market’s earnings per share growth will fall by 0.8 per cent, Bahana Securities said.
“This suggests that the recent JCI record highs are not accompanied by market EPS growth. Against this backdrop, we believe either the IDR would have to strengthen ahead or the index would have to fall,’’ the broker said in its report.
Bangkok’s SET index fell 0.6 per cent, with investors cashing in on recent gains in banking shares, such as Krung Thai Bank and Kasikornbank, ahead of the central bank’s decision on interest rates on Wednesday. A rate cut could help limit losses in the market, brokers said.
“Investors are eyeing the Thai MPC’s decision on March 11. Our economist expects the committee to cut interest rate by 25 basis points to 1.75 per cent, a positive case for SET in our view,’’ broker KGI Securities said in a report.
Sixteen of 21 economists in a Reuters poll predict the one-day repurchase rate will be left at 2.0 per cent, while the other five expect a 25 basis point cut.
The Philippine main index eased 0.7 per cent after a 0.5 per cent gain to a record closing high of 7,861.33 in the previous session.
Singapore’s benchmark Straits Times Index and Malaysia’s Kuala Lumpur Composite Index both hit their lowest since January 22. Vietnam extended losses for a third session, hitting its lowest since March 3.
US employers stepped up hiring in February and the jobless rate fell to its lowest level since the spring before President Barack Obama took office, which could put pressure on the Federal Reserve to raise interest rates in June.