BANGKOK: Indonesian stocks retreated the most among Southeast Asian markets on Friday, with several others drifting into negative territory on technical-led selling in regional large caps as investors turned cautious over the US Federal Reserve’s policy outlook.
Jakarta’s Composite Index dropped 1.7 per cent after a 4.7 per cent rally in the previous session, trimming its gains so far on the week to around five per cent.
Bank Mandiri and car maker Astra International led the decline. Analysts said a slowing domestic economy meant potential weak corporate earnings and investors should take profits on higher prices.
"It’s a healthy correction following yesterday’s strong move... At the end of the day, Jakarta is very much a trading market for now, and hence, we advise clients to take profits on exaggerated moves," said Harry Su, head of research at Bahana Securities.
The Fed’s unexpected decision to maintain its monetary stimulus sparked short-covering across Southeast Asian exchanges on Thursday, with US$90 million worth of net foreign buying in Indonesia alone, Thomson Reuters data showed.
Singapore’s Straits Times Index was down 0.5 per cent, on track for a weekly gain of 3.8 per cent, its biggest since December 2011. Traders said Thursday’s rise put the index in uncharted territory, prompting quick profit-taking.
"The immediate target highlighted at 3170/75 was easily exceeded as the rally surged to a high of 3260 yesterday. While the upward momentum is still strong, the rally appears to be running ahead of itself," UOB strategists wrote in a report.
Thai SET index slid 0.2 per cent, erasing some of the 3.5 per cent gain the day before but still poised for a 5.8 per cent jump on the week, the biggest since December 2011.
Vietnam was flat, with blue chips standing still.
The Philippine main index closed down 1.3 per cent, racking up a gain of 4.8 per cent on week, its best since March.
Malaysia bucked the trend, rising 0.5 per cent and building on a 1.2 per cent rise on Thursday.-- Reuters