Southeast Asia stocks mostly down; Philippine shares fall on inflation concerns

(AFP pic)

MANILA: Philippine shares ended lower on Monday on caution ahead of inflation data due later in the week, while most other Southeast Asian stock markets dropped after a survey showed manufacturing activity in China slowed and export orders fell the sharpest in more than two years.

China’s factory sector stalled after 15 months of expansion and export orders took a hit, according to a private survey, in a worrying sign that the trade war with the US was taking its toll on the country’s economy.

Overall, trading in the region was lean due to holidays in Mainland China and Hong Kong.

Meanwhile, United States’ negotiations with Canada ended on a positive note, with the countries forging a deal to salvage the North American Free Trade Agreement (Nafta) deal as a trilateral pact with Mexico.

However, concerns over the Sino-US trade dispute continued to weigh on risk appetite in Southeast Asia.

Investors expect that the NAFTA deal will improve the trading climate, said Manny Cruz, an analyst with Asiasec Equities Inc.

In the region, Philippine shares closed lower ahead of inflation data due at the end of the week, with conglomerates SM Investments Corp and Ayala Corp sliding 2.7% and 1.9%, respectively.

Fio Dejesus, an analyst with Manila-based RCBC Securities, said inflation data, which by consensus estimates is expected to be higher than last month’s figure, could prompt another rate hike by the central bank and that may hurt real economic growth apart from increasing companies’ interest outgo.

The country’s central bank raised interest rates for a fourth time in five months last week and kept the door open for further tightening as it battles inflation.

Indonesian shares closed 0.5 lower, weighed down by the consumer staples sector.

Among the top drags to the index, Unilever Indonesia Tbk slid 1.5% and food retailer Sumber Alfaria Trijaya Tbt declined 9.7%.

Earlier in the day, data showed Indonesia’s September inflation cooled to the lowest in over two years.

Thai shares bucked the trend by posting marginal gains, helped by the energy and materials sectors. Oil & gas major PTT Exploration and Production was the top performer on the index with a 3.2% gain.