High and dry

21 September 2011 By Wayne Arnold

Asia’s failure to develop larger securities markets is coming home to roost. Investors are beating a path for exits despite the region’s relatively strong finances. Their fear: a retreat by European investors could leave them marooned, unable to cash out without rocking prices.

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Yields on ten-year Indonesian government bonds rose Sept. 20 to above 7.2 percent, their highest in almost two months, as foreign investors withdrew $178 million from dedicated Indonesian government bond funds, according to data from HSBC. Indonesia’s benchmark stock index has fallen more than 6 percent since Sept. 8. Foreign investors have in the past month sold $556 million in Indonesian stocks, according to Nomura. The Philippine benchmark index dropped 2.05 percent Sept. 20. It has fallen almost 4 percent since Sept. 2.

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