Thai, Vietnamese stocks plunge on Fed rate hike bets
published : 12 Sep 2016 at 17:39
Thai and Vietnames shares dived in line with broader Asian markets on Monday, as investors were put off by rising bond yields and talks of a rate hike by the US Federal Reserve as early as next week.
Reports that the Bank of Japan is studying options to steepen the Japanese bond yield curve as authorities are looking out for policy tools to revive the economy also hit sovereign debt and risk appetite globally.
Global markets have started pricing in a greater chance of a Fed rate hike on Sept 21 on the back of a series of hawkish speeches.
No less than three Fed officials are expected to speak later in the day, including board member and noted dove Lael Brainard.
Any hint of hawkishness would likely further pressure bonds and equities.
"News of Fed rate hike is clearly like a perfect storm of reason to sell down the market," said Thapana Phanich, an analyst with Deutsche Tisco Investment Advisory.
Investor sentiment was also hurt as oil prices fell over 1.5%, extending losses from the previous session, after reports showed increasing drilling activity in the United States, indicating that producers can operate profitably around current levels.
The Stock Exchange of Thailand fell for a fourth straight session, losing as much as 2.4% to its lowest since June 27. The SET closed 2.31% lower.
Investors are taking money off the table and the impact on the market is mainly from foreign investors, Mr Thapana said.
If there is no major domestic upheaval, the market should trade around 1,400 level for the rest of the year, he added.
Vietnam shares fell as much as 1.7% in their biggest intra-day percentage fall in nearly six weeks, with consumer staples and energy stocks losing the most. Vietname closed 1.07% lower.
Vietnam Dairy Products JSC declined 1.3%, while Petrovietnam Gas JSC fell 2.2%.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 2.9% at 4.40pm, its largest single-day drop since the fall after Britain's vote in late June to leave the European Union.
Markets in Singapore, Malaysia, Indonesia and the Philippines were closed for a public holiday.