According to a report from the Wall Street Journal, "a selloff across Southeast Asia's markets has accelerated in the new year with currencies falling sharply and bond yields jumping as a cocktail of rising political protests, worries over upcoming elections and shaky growth prospects scares investors away".
Indonesia was in the spotlight Tuesday with the government scheduled to sell 10-year dollar debt at a yield of about 6.2%, almost double the levels when it issued similar bonds last April, according to term sheets seen by The Wall Street Journal. Elsewhere, the Philippine and Thai currencies have fallen to their lowest levels in about three years, Indonesia's rupiah is at its lowest since levels seen in 2008, while stocks in the region are down as well.
The declines started over six months ago, when fund managers retreated from emerging markets after the U.S. signaled it would scale back its bond-buying program. But the selloff has barely paused for breath despite efforts by governments and central banks to put in place measures to lure money back, and even some signs of improving trade finances.
Now investors are grappling with two months of street protests in Bangkok and rising discontent in Cambodia and Bangladesh. Upcoming elections this year in Indonesia and Thailand may delay policy-making and will be another deterrent to rekindling interest in those markets, investors and analysts say. Political troubles are already threatening to derail an infrastructure program in Thailand worth two trillion baht ($60.4 billion).
"I can't see compelling reasons to jump into Southeast Asia right now," said Sam Le Cornu, senior portfolio manager at Macquarie, who oversees assets under management of $1 billion. "Negative sentiment has really caused many of these Southeast Asian markets to be sold off."
