Fading SE Asian stock recovery puts focus on robust infrastructure story

Sun Nov 15, 2015 4:21pm EST
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By Viparat Jantraprap and Nichola Saminather

BANGKOK/SINGAPORE (Reuters) - As a broad-based recovery in Southeast Asian stocks from this year's bear market lows fades, investors are now pivoting to bottom-up strategies and selectively seeking stocks exposed to the region's more enduring growth themes.

The MSCI index of Southeast Asia .MISU00000PUS, a benchmark of the region's biggest stocks, plunged 28 percent in the five months through September, driven in part by concerns about slowing Chinese demand and bringing valuations down to 2009 lows.

And while stocks clawed back about a third of these losses in October, lower commodity prices, tepid Chinese economic data and the specter of an imminent U.S. interest rate rise have sent the MSCI regional index back down 23 percent from its April peak.

This technically puts the index back into bear market territory, which analysts define as a fall of at least 20 percent from such a peak.sss

"The market was oversold in September. The delay in the Fed's rate hike and lower valuations supported the market in October," said Soek Ching Kum, Credit Suisse head of Southeast Asia Research, Private Banking and Wealth Management.   Continued...

An investor writes on papers as he sits in front of an electronic board showing stock information at a brokerage house in Fuyang, Anhui province, China, October 8, 2015. REUTERS/Stringer