Tuesday, December 6, 2011

SE Asia Stocks-Most markets slide on euro zone rating jitters

KUALA LUMPUR (Dec 6): Most Southeast Asian stock markets pulled lower on Tuesday as a warning by ratings agency Standard & Poor's of a possible mass downgrade of the euro zone kept market investors wary ahead of the EU summit late this week.

Stocks in Singapore, Indonesia and other major sharemarkets fell to around one-week lows in choppy trading sessions that involved thin volume.

Mild selling pressure hit many recent gainers, including banking stocks, as investors grew jittery over the impact of a potential rating downgrade on the global financial system.

Brokers said market players returned for a bargain at one point thanks to some positive expectations involving a meeting of European leaders this week.

Singapore's Straits Times Index and Malaysia's benchmark stock index each edged down 0.6 percent. Jakarta's Composite Index (JCI) fell 0.7 percent.

Yasmin Soulisa, analyst at broker Bapindo Bumi Sekuritas in Jakarta, expects further market downside, saying that with a negative outlook for all of Europe, "there's a big possibility we will see the JCI weakening toward year end."

The Philippines was down 0.21 percent and Vietnam was 0.25 percent off. Thai stocks ended up 0.14 percent, reversing early losses, as domestic institutions bought shares for retirement mutual funds (RMFs) and long-term equity funds (LTFs) that offer tax breaks.

Demand for the funds often strengthens near the end of a year. In Singapore, market turnover fell to 0.7 times a 30-day average, with selling interest seen in banks.

DBS Group Holdings Ltd dropped 2.4 percent and United Overseas Bank Ltd slipped 1.3 percent. Traders attributed the selling to the unprecedented warning from Standard & Poor's. "I don't think the timing is really conducive. This kind of warning should have come two years ago. It should not be now," a Singapore-based trader said.

Asia and global equities halted a rally that began last week and had continued on Monday, when the leaders of France and Germany agreed on a plan aimed at guiding Europe out of its debt crisis.

MSCI's broadest index of Asia Pacific shares outside Japan was off 1.5 percent at 1000 GMT. Among losers in the region, Indonesia's PT Bank Mandiri eased 1.5 percent and Malaysia's CIMB Group Holdings Berhad fell 1.7 percent. - Reuters

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