(Dec 6): Southeast Asian stock markets closed lower on Thursday, in line with broader Asia, after the arrest of a top executive of Chinese tech giant Huawei for extradition to the U.S. stoked fears of an escalation in tensions between the two countries.
The MSCI's ex-Japan Asia-Pacific index fell 2% as the recent development was seen as a blow to U.S.-China relations, deepening scepticism about a potential resolution to a long-running trade war as both parties enter a crucial 90-day truce period.
Investor sentiment was dented further by rising worries of an economic slowdown and a possible rise in U.S. interest rates, after the benchmark U.S. treasury 10-year yield hit a three-month low on Wednesday.
"While the global economy is on a gradual slowdown rather than an uncontrolled spiral, the path is on a knife's edge amid U.S.-China trade tensions (notwithstanding a temporary truce), tightening policy and geo-political risks kicking up volatility and uncertainty," said Vishnu Varathan — head, economics and strategy at Mizuho Bank.
The Singapore index fell 1.3%, led by technology stocks.
Philippine stocks fell 1.3% with real estate and financials leading the losses.
SM Prime Holdings Inc dipped 3.5%, while Ayala Corp dropped 2.7%.
Meanwhile, a dip in oil prices on the backdrop of an OPEC meeting sent Thai stocks 1.1% lower.
Oil prices fell on Thursday as stock markets slid and as traders eyed a meeting of the oil bloc expected to result in a supply cut aimed at draining a glut that has pulled down crude prices by 30% since October.
Index heavyweights PTT PCL and Airports of Thailand PCL were the top drags on the index, shedding 2.4% and 1.5% respectively.