SE Asia Stocks Inch Up

Most Southeast Asian stock markets edged up on Monday ahead of a US Federal Reserve policy meeting that could give hints on the pace of further rate tightening in the months to come and next year.

With the Fed widely expected to raise interest rates at its two-day meeting that ends on Wednesday, investors will be focusing on whether the central bank thinks the US economy is robust enough to withstand further rate hikes through 2017 and how it plans to whittle down its massive balance sheet, Reuters reported.

“A 25 basis point rate hike is assumed to be a done deal for the June Federal Open Market Committee; with interest rate markets ascribing over 90% probability,” Mizuho Bank said in a note. “This means a 25 basis point hike is baked into market (prices), and so failure to yank the trigger will result in a dovish knee-jerk reaction; but this is the outside risk.”

MSCI’s broadest index of Asia-Pacific shares outside Japan , however, was down 0.8% as the region’s technology heavyweights were knocked lower by a slide in US tech shares. Singapore shares rose as much as 0.5% to a four-week high, driven by financials, before paring some of the gains.

In other markets, Indonesia was up 0.5% with consumer stocks driving the gains. Vietnam shares rose 0.5%, led by FLC Faros Construction, which jumped as much as 6.9% to post its biggest intra-day percentage gain in more than three months.

Meanwhile, China and Hong Kong stocks started the week on a bearish note, as tech plays in both markets tracked the sell-off in US counterparts, with sentiment also hurt by the prospect of renewed China slowdown in the second half amid tighter credit.

China’s blue-chip CSI300 index fared better than small caps, slipping just 0.1% to 3,573.39 points by the lunch break. The Shanghai Composite Index lost 0.5%, to 3,144.30 points.

In Hong Kong, both the Hang Seng index and the Hong Kong China Enterprises Index lost more than 1%, to 25,712.55 points and 10,480.33 points, respectively.

Both China and Hong Kong-listed tech shares dropped sharply, following a sell-off on Friday in technology stocks on Wall Street that was triggered by concerns about Apple’s new iPhones and a cautious Goldman Sachs report about the sector.

Bucking the trend, China Vanke jumped 4.6% in Shenzhen and rose 0.7% in Hong Kong, after Shenzhen Metro became its top shareholder, replacing rival developer China Evergrande Group.