SE Asia stocks wary on Fed rate hike uncertainty

Most Southeast Asian stock markets ended lower on Wednesday in line with Asian peers, as rising bond yields and volatility forced investors to unwind positions while uncertainty over global central banks' next moves hurt risk appetite.

While the rise in US bond yields was in part due to heavy Treasury and corporate debt supply, it also reflected concerns about the limits of global central bank policy in reviving growth.

US interest rate futures are pricing in only about a 10% chance of a rate hike by the Federal Reserve at its policy review next week.

Inflows into emerging-market equity funds amounted to $24 billion over the past 10 weeks, the highest on record, according to Bank of America Merrill Lynch flow data.

Indonesian shares fell for a fourth straight session with consumer staples and discretionary stocks leading the losses. Astra International Tbk PT fell 2.8%, while PT Indofood CBP Sukses Makmur Tbk dropped 4.2%.

Negative sentiments in the market have become "good excuses for investors to lock in their profits," Daewoo Securities Indonesia said in a note.

Malaysian shares declined for a third straight session, led by telecom services and financial stocks. Axiata Group Bhd fell 3.3%, while Public Bank Bhd dropped 1.7%.

Malaysian banks' exposure to the oil and gas sector is still high and we expect this to continue to remain an issue for these banks due to volatile oil prices, Nomura said in note.

Malaysia is the only clear-cut market in the region which loses when oil prices fall, said Peter Sartori, head of Asian equity at Nikko Asset Management in Singapore, adding that "many fiscal positions across Asia are improving, except for Malaysia." 

Bucking the trend, Thai shares closed 0.78% higher, led by financials and industrials.

"The long-term future for Thailand is pretty good," Sartori added.