Southeast Asian markets fall as investors shift to China

Investors are pulling money out of Southeast Asia as concerns grow over the region's biggest economies. Indonesia and Thailand, the largest economies in Southeast Asia, have faced significant foreign equity outflows this year. Many investors are now shifting their focus back to Chinese stocks. This week, Indonesian stocks dropped to their lowest level in four years before showing some recovery. The Indonesian rupiah is at its lowest point in nearly five years, with the Jakarta Composite stock index falling 1.2% recently. Overall, the MSCI Indonesia index has decreased about 16% this year in US dollar terms, while the MSCI Thailand index has fallen just over 12%. Economic worries, a global trade conflict, and regional fund managers moving funds to China are behind the sell-off. So far this year, foreign investors have withdrawn $1.3 billion from Indonesian markets and $500 million from Thai markets, while investing $13 billion in Chinese equities. Chinese stocks have performed well, particularly in the tech sector, with Hong Kong's Hang Seng index rising over 20% since January. Experts believe that Southeast Asia could face further challenges due to tariffs from the US, which could affect commodity prices and trade dynamics. Indonesia has been hit by concerns of slowing growth and ambitious fiscal policies from President Prabowo Subianto, who took office last October. Under his leadership, the rupiah has fallen 6% against the dollar, and investor confidence is waning due to plans for costly social programs and the establishment of a new sovereign wealth fund. Thailand, too, is facing economic challenges, including high household debt and slow consumer spending. A potential 10% US tariff on Thai exports could reduce the country's GDP by 0.2-0.3%. Analysts note that Thailand's economic outlook is difficult, marked by stagnation in manufacturing and tourism. Without significant reforms and new investments, Thailand risks entering a low-growth situation.