Indonesia Leads Rout in Southeast Asian Shares on Fed Concerns

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Indonesian stocks slumped, with the benchmark index entering a correction, as Southeast Asian shares retreated amid concern higher U.S. borrowing costs will curb demand for riskier assets.

The Jakarta Composite Index fell 2.3 percent to 4,899.9 at the close, taking its decline from an April 7 record to more than 10 percent. The Philippine Stock Exchange Index sank 2.2 percent to a five-month low. Thailand’s SET Index lost 1 percent, poised to halt a four-day advance.

The MSCI Emerging Markets Index is extending its longest losing streak since 1990 amid a stream of data signaling that the U.S. economy may be strong enough to sustain its first interest-rate increase since 2006. Reports this week are forecast to show improvements in consumer sentiment and retail sales. Payrolls jumped in May by the most in five months, the Labor Department said Friday.

“Concern about the increase in U.S. interest rates is really hurting emerging markets, especially Thailand, Indonesia and the Philippines,” Warut Siwasariyanon, the head of research at Asia Wealth Securities Co., said by phone in Bangkok. “The so-called TIPS markets will probably face the biggest fund outflows if higher U.S. rates lead to more dollar strength. Indonesia and the Philippines are also subject to selling pressure after strong rallies last year.”

The Indonesian stock benchmark climbed 22 percent last year, while the Philippine gauge increased 23 percent and Thailand’s SET Index rallied 15 percent.

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The MSCI Emerging Markets Index declined 0.6 percent as of 10:20 a.m. in London, poised for a 12th day of losses.

PT Bank Rakyat Indonesia, the nation’s second-largest lender by market value, plunged 4.8 percent to a seven-month low. PT Unilever Indonesia slumped 4.5 percent.

Indonesian companies represented five of the ten biggest percentage decliners Tuesday on the MSCI Southeast Asia Index, which headed for its lowest close since February 2014. The Jakarta index trades at 14.2 times its projected 12-month earnings, below its three-year average of 14.3 times, according to data compiled by Bloomberg. That’s still higher than the MSCI Emerging Markets Index’s multiple of 11.8 times.

Ayala Land Inc., the Philippines’s most valuable property developer, retreated 4.5 percent in Manila and was the biggest contributor to the index’s losses. JG Summit Holdings Inc. and SM Prime Holdings Inc. slumped at least 4 percent.

Tenaga Nasional Bhd. fell 1.2 percent in Kuala Lumpur, where the FTSE Bursa Malaysia KLCI Index declined 0.6 percent. PTT Pcl, Thailand’s largest company by market value, retreated 1.7 percent, while Siam Cement Pcl dropped 1.9 percent.

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