Stocks in Southeast Asia are tumbling at the fastest pace in 12 years relative to global equities, sending the regional benchmark index into a bear market as foreign investors cut holdings for a third month.
The MSCI Southeast Asia Index has dropped 11 percent this month and is down 21 percent from this year’s peak on May 8. The gauge’s August retreat is 9.1 percentage points bigger than that of the MSCI All-Country World Index, the widest gap since April 2001. The Asian measure is valued at 1.8 times net assets, falling below the global index’s multiple of 1.9 for the first time since at least 2009, data compiled by Bloomberg show.
Foreign investors have sold a net $2.2 billion of Thai, Indonesian and Philippine shares this month amid signs of slowing regional economic growth and speculation that the U.S. Federal Reserve will soon cut stimulus. While the retreat has spurred state pension funds in Indonesia and Thailand to boost stock holdings, Bank Julius Baer & Co. and Societe Generale SA say it’s too early to buy. The MSCI Southeast Asia gauge has posted average losses of 44 percent in bear markets since 1995.
“Investors have a mentality of take money out first, ask questions later,” David Poh, the regional head of portfolio-management solutions at Societe Generale’s private bank, which oversees about $113 billion, said by phone from Singapore. “We are not entering the market in the near future.”
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