SE Asia Stocks-Weak due to Europe debt, global slowdown worries

SINGAPORE (Dec 15): Major Southeast Asian stock markets fell on
Thursday for the third day, led by banks and commodities as a decline in
Chinese factory output added to worries about the global economy and
Europe's debt crisis.

China's factory output shrank again in December after new orders
fell, a preliminary purchasing managers' survey showed, entrenching
expectations that manufacturers are struggling with waning global demand
and tight domestic credit conditions.

Concern over the situation in the euro zone rose after Fitch Ratings downgraded five big European banks on Wednesday.

"Uncertainty in the euro zone and worry about a slowdown will
persist," said Song Seng Wun, a Singapore-based regional economist at
CIMB-GK Research. "Any small move here and there gets exaggerated."

He said investors and funds would focus on defensive stocks such as
transport and power firms until they see clear signs of a global
recovery. Indonesia fell 1.3 percent to its lowest since Nov. 29,
Singapore lost 1.4 percent to a 10-week closing low, the Philippines
edged down 0.1 percent and Vietnam, the region's smallest bourse,
dropped 0.8 percent to its lowest close in more than 2-1/2 years.

Thailand and Malaysia, bucking the trend, edged up 0.1 percent.
Jakarta suffered a net foreign outflow of $73.9 million and Kuala Lumpur
saw $13.9 million leave. Manila enjoyed a net inflow of $28.3 million.

Traders in Singapore said there were concerns about higher
counterparty risk for Singapore lenders after Fitch Ratings downgraded
five major European banks.

Shares in Singapore's United Overseas Bank and DBS Group closed down
2.8 percent and 2.1 percent respectively, while Oversea-Chinese Banking
Corp lost 1.3 percent. In Bangkok, energy and banks pulled the
market down, although it recovered in the final hour.

Teerada Charnyingyong, a strategist at broker Phillip Securities in
Bangkok, said sentiment was quite weak and the main reason remained the
euro zone debt crisis.

"We see no significant direct impact from the situation in Europe but
there should be an indirect impact on fund flows and market sentiment.
With no near-term solutions seen, the market is likely to be volatile
going into the early part of next year at least," she said.

In Jakarta, blue-chip stocks fell, with Indonesia's biggest car
maker, PT Astra International, slumping 4.1 percent,
government-controlled PT Gas Negara slipping 2.4 percent and cigarette
producer PT Gudang Garam easing 2.3 percent.

In Kuala Lumpur, analysts said investors were extremely cautious and
were favouring companies paying decent dividends, plus gold.

"Asia will not be immune from the West's macro challenges, but
improvements in intra-regional trade and the domestic consumption cycle
will help Asia ride out the tough times ahead," said Bharat Joshi,
assistant investment manager who helps oversee $5 billion of assets for
Aberdeen Asset Management in Kuala Lumpur.

"It could be a short-term sell-off as investors realise that Asian
companies' balance sheets are a lot stronger and cash flows are still
very healthy."

The MSCI's broadest index of Asia Pacific shares outside Japan fell 1.8 percent by 0945 GMT. - Reuters