Sliding oil prices shook up Southeast Asia’s markets
Wednesday as Thailand overtook Malaysia as home to the region’s second-biggest
stock exchange by market capitalization. Oil’s decline of nearly 60% in six
months has hit exporters such as Malaysia particularly hard, putting pressure
on government finances and on companies that derive their revenue from
exporting the commodity. At the same time, net importers like Thailand have
made gains.
The total market capitalization of all companies listed on
the Stock Exchange of Thailand was around US$466.8 billion at market close on
Wednesday, compared with US$466.7 billion for those listed on Bursa Malaysia,
according to statistics from both exchanges. Singapore is still by far the
largest in the region, with a total market capitalization of about US$800
billion.
The impact of oil’s plunge on Thailand and Malaysia is part
of a global ripple effect that has shaken up markets from Russia to the U.S.
and has prompted central banks such as Singapore’s to make hasty changes
to policy. So far this year, Malaysia’s main stock index has risen 2% compared
with Thailand’s 6.4% gain. Since oil began falling in mid-2014, oil producers
such as SapuraKencana Petroleum Bhd. have been badly hit. Although
SapuraKencana has regained some ground this year, it stock has dropped more
than 30% in the past six months.
A divergence in the countries’ currencies also has helped
Thailand’s stock market overtake Malaysia’s, in U.S. dollar terms. Against the
U.S. dollar, Thailand’s baht has strengthened 0.9% to 32.62 baht per dollar
this year, while Malaysia’s ringgit has weakened as much as 3.8%, trading late
Thursday at 3.63 ringgit per dollar.
In Malaysia it is the opposite story. Last week the
government announced a revised 2015 budget, which included higher estimates for
budget deficits this year and cuts to spending. Much of the pressure is a
direct impact from falling oil prices — petroleum receipts accounted for about
30% of government revenue in 2013. Petroliam Nasional Bhd., the country’s
state-owned oil and gas giant, contributes about $10 billion each year to the
national budget and is Malaysia’s sole Fortune 500 company.
Click
here to access the full article on The Wall Street Journal.