Indonesia’s JCI Crushed 5.6%, Thailand’s SET Slammed 3.27%

Well my allegorical ink from last night’s outlook has hardly dried…

Here is what I wrote:

And if rising UST yields have indeed been reflecting on growing scarcity of the quantity of US dollar relative to her non-reserve currency trading partners such as ASEAN, then higher yields would likewise imply pressure on the currencies, and similarly but not contemporaneous, on prices of financial assets…

While so far, Asia and other Emerging Markets appear to be the most vulnerable, should bond yields continue to soar, which implies of amplified volatility on the bond markets and eventually interest rate markets, the impact from such lethal one-two punch will spread and intensify.

This makes global risks assets increasingly vulnerable to black swans (low probability-high impact events) accidents.

Financial market black swan apparently buffeted 2 ASEAN equity markets today.

I even talked about their gloomy charts

Indonesia’s JCI endured a terrifying 5.6% dive!

The JCI broke major support levels and is about 3% away from the 20% bear market threshold (charts and data from Bloomberg)

Indonesia’s rupiah (USD-IDR) has also been smashed (chart from XE.com)

Remember, Indonesia used to be the darling of emerging markets having seen a flurry of credit rating upgrades in 2002-2011. 

To quote this Wall Street Journal article...

Indonesia – not long ago a golden boy of emerging markets – is struggling to combat the triple threat of slowing growth, rising inflation and an exodus of foreign exchange that is slamming the county’s currency.

Today Indonesia looks like the canary in the coalmine for ASEAN. As I have been saying credit rating upgrades seem like a kiss of death.

Meanwhile Thailand’s SET appears to have sympathized with Indonesia…

The SETI plunged by a ghastly 3.27%...

The Thai equity benchmark is now about 2.4% away from the June Bernanke taper low. (chart from Bloomberg)

The Thai currency (USD-THB) the baht has also been walloped. (XE.com)

Malaysia’s KLSE partly felt the heat, the benchmark fell by .55%.

While stock market losses were a lot subdued compared to Indonesia and Thailand, the ringgit (USD-MYR) has also been thumped.

Philippine financial markets has been suspended today due to floods brought by Typhoon Maring or Tropical Storm Trami

Nonetheless the currency spot markets reveals that the Peso (USD-Peso) has also been swamped.

Has Typhoon Maring or Tropical Storm Trami been a blessing in disguise for Philippine stocks? Or will we see a belated sympathy move tomorrow similar to June 14th? Or will Philippine stocks resonate with Malaysia's mitigated loss? Or will Philippine stocks defy the contagion out of "this time is different"?

As of this writing, yields of 10 year UST has been significantly up from Friday’s close (chart from investing.com)

If the selling downpour in Indonesia and Thailand continues, then this may well be the second round of the May-June Taper meltdown--ASEAN version.

Interesting times indeed. Caveat emptor