Hot money returns to Southeast Asia

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stock exchange vietnamThe tide of hot money is turning in favour of Thailand, Indonesia and the Philippines, Bloomberg reported. Overseas investors have bought a net $1.6 billion of shares in the three Southeast Asian countries in March 2014, poised for the biggest monthly inflow since January 2013. That follows $4.2 billion of withdrawals in the fourth quarter, which matched the largest outflow since Bloomberg began tracking the data in 1999.

The combination of easing political unrest in Thailand, a shrinking current-account deficit in Indonesia and slowing inflation in the Philippines is convincing foreign investors that the economies are strong enough to weather reduced Federal Reserve stimulus. Equity gauges in the three countries are trading at valuations at least 9 per cent cheaper than their 2013 peaks even after climbing an average 9.2 per cent this year.

“The rapid rise in these markets is merely a catching up from last year’s decline caused by hot-money outflows,” David Ross, a managing director at Chevy Chase Trust in Bethesda, Maryland, which oversees about $17 billion, said. He predicted further gains in Indonesian and Philippine shares, while saying the rally in Thailand may be near an end.

Indonesia’s central bank estimates the nation’s current-account deficit will narrow to 2.5 per cent of gross domestic product this year from about 3.3 per cent in 2013, while Philippine inflation slowed in February for the first time in six months. Thailand’s government agreed to end a state of emergency in Bangkok yesterday following months of anti-government protests and clashes that killed 23 people.

The Jakarta Composite Index has climbed 13 per cent this year through yesterday, while the Philippine Stock Exchange Index gained 9.7 per cent. Thailand’s SET Index added about 5 per cent as tourism-related companies including Central Plaza Hotel and Airports of Thailand rallied. The MSCI Emerging Markets Index has lost 5.2 per cent.

That’s a turnaround from the second half of 2013, when the Fed’s move toward paring its record stimulus program dragged down the Southeast Asian indexes by at least 8.9 per cent, making them three of the world’s four biggest losers among global equity gauges.

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Reading Time: 2 minutes

The tide of hot money is turning in favour of Thailand, Indonesia and the Philippines, Bloomberg reported. Overseas investors have bought a net $1.6 billion of shares in the three Southeast Asian countries in March 2014, poised for the biggest monthly inflow since January 2013. That follows $4.2 billion of withdrawals in the fourth quarter, which matched the largest outflow since Bloomberg began tracking the data in 1999.

Reading Time: 2 minutes

stock exchange vietnamThe tide of hot money is turning in favour of Thailand, Indonesia and the Philippines, Bloomberg reported. Overseas investors have bought a net $1.6 billion of shares in the three Southeast Asian countries in March 2014, poised for the biggest monthly inflow since January 2013. That follows $4.2 billion of withdrawals in the fourth quarter, which matched the largest outflow since Bloomberg began tracking the data in 1999.

The combination of easing political unrest in Thailand, a shrinking current-account deficit in Indonesia and slowing inflation in the Philippines is convincing foreign investors that the economies are strong enough to weather reduced Federal Reserve stimulus. Equity gauges in the three countries are trading at valuations at least 9 per cent cheaper than their 2013 peaks even after climbing an average 9.2 per cent this year.

“The rapid rise in these markets is merely a catching up from last year’s decline caused by hot-money outflows,” David Ross, a managing director at Chevy Chase Trust in Bethesda, Maryland, which oversees about $17 billion, said. He predicted further gains in Indonesian and Philippine shares, while saying the rally in Thailand may be near an end.

Indonesia’s central bank estimates the nation’s current-account deficit will narrow to 2.5 per cent of gross domestic product this year from about 3.3 per cent in 2013, while Philippine inflation slowed in February for the first time in six months. Thailand’s government agreed to end a state of emergency in Bangkok yesterday following months of anti-government protests and clashes that killed 23 people.

The Jakarta Composite Index has climbed 13 per cent this year through yesterday, while the Philippine Stock Exchange Index gained 9.7 per cent. Thailand’s SET Index added about 5 per cent as tourism-related companies including Central Plaza Hotel and Airports of Thailand rallied. The MSCI Emerging Markets Index has lost 5.2 per cent.

That’s a turnaround from the second half of 2013, when the Fed’s move toward paring its record stimulus program dragged down the Southeast Asian indexes by at least 8.9 per cent, making them three of the world’s four biggest losers among global equity gauges.

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