Southeast Asian stock markets, including Vietnam plummeted on Thursday, joining a global equity rout after a selloff on Wall Street spooked investors.
On Wednesday, Wall Street posted its biggest daily decline in eight months as concerns around rising debt yields and prospect of rising interest rates gripped equity markets worldwide.
Over the past few months, an intensifying trade war between the United States and China has also hit risk assets on worries about global growth.
The sharp fall on Wednesday was bad enough to attract the attention of U.S. President Donald Trump, who said the selloff was in fact a long-awaited “correction,” and that the Federal Reserve, which has been raising rates, had gone “crazy”.
Investors now await U.S. inflation figures due later in the day as a high outcome would only stoke speculation of more aggressive rate hikes from the Fed.
“That’s a signal of ‘rotation’ out of equities and back into bonds as the Fed raises rates, rather than the bullish argument sold to us of the opposite happening,” Rabobank analysts said, referring to “a mess” in markets as a small rise in yields caused a fall in global equities which then caused yields to fall on Wednesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 4 percent.
Vietnam shares <.VNI> plunged 5.5 percent, their biggest intraday drop since early February, and hit an eight-week low.
Oversea-Chinese Banking Corp fell as much as 3.4 percent and DBS Group Holdings dropped 2.9 percent.
Singapore shares <.STI> slumped 2.8 percent in their sharpest intraday fall since Feb 6 and hit a 20-month low, weighed down by heavy losses in financials.
Financial and real estate stocks were the biggest losers, with Joint Stock Commercial Bank for Foreign Trade of Vietnam shedding 5.7 percent and Vingroup JSC declining 4.7 percent.
“Domestically, Vietnam is facing upward pressure on inflation, mostly due to a rise in energy prices. We don’t know yet where the bottom is,” said Tran Anh Tuan, chief analyst at Vietcombank Securities.
Philippine shares <.PSI> tumbled 3 percent to a 21-month low, dragged industrial stocks.
SM Investments slid 4.2 percent and JG Summit Holdings declined 6.4 percent.
Malaysian shares <.KLSE> slumped 3 percent to a three-month low, Indonesian stocks <.JKSE> fell 2.6 percent to a more than one-month trough and Thailand <.SETI> dropped 2.7 percent to a one-month low.
Niyati Shetty reported on REUTERS