Thailand and Vietnam shares fell in line with broader Asian markets on Monday, as investors were put off by rising bond yields and talks of a rate hike by the US Federal Reserve as early as next week.
Reports that the Bank of Japan is studying options to steepen the Japanese bond yield curve as authorities are looking out for policy tools to revive the economy also hit sovereign debt and risk appetite globally.
Global markets have started pricing in a greater chance of a Fed rate hike on September 21 on the back of a series of hawkish speeches.
No less than three Fed officials are expected to speak later in the day, including board member and noted dove Lael Brainard. Any hint of hawkishness would likely further pressure bonds and equities.
“News of Fed rate hike is clearly like a perfect storm of reason to sell down the market,” said Thapana Phanich, an analyst with Deutsche TISCO Investment Advisory.
Investor sentiment was also hurt as oil prices fell over 1.5 percent, extending losses from the previous session, after reports showed increasing drilling activity in the United States, indicating that producers can operate profitably around current levels.
Thai shares fell for a fourth straight session, losing as much as 1.8 percent to its lowest since June 27.
Investors are taking money off the table and the impact on the market is mainly from foreign investors, Thapana said, adding that if there was no major domestic upheaval, we should see the market trading around 1,400 level for the rest of the year.
PTT Pcl fell 2.5 percent, while PTT Exploration and Production Pcl dropped 3.8 percent.
Vietnam shares were down 1.2 percent, with consumer staples and financials losing the most.
Vietcom Bank fell 3.1 percent, while Vietnam Dairy Products JSC declined 1.3 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.4 percent at 0440 GMT, its largest single-day drop since the fall after Britain’s vote in late June to leave the European Union.
Markets in Singapore, Malaysia, Indonesia and the Philippines were closed for a public holiday.