SINGAPORE/MANILA (BLOOMBERG) - The meltdown in South-east Asian emerging markets following Mr Donald Trump's upset US election win is so unsettling that Mr Alan Richardson is cancelling his holiday plans.
"This year has really been messy," says Mr Richardson, investment manager at Samsung Asset Management in Hong Kong, whose Asean equities fund has returned 18 per cent this year to beat 87 per cent of its peers. "It's been extremely difficult to be ahead of the curve this year because of the volatility. I don't have the luxury of taking time off."
At least US$916 million (S$1.3 billion) has been pulled from Indonesian, Malaysian, Philippine and Thai stocks since Mr Trump's Nov 8 victory sent shockwaves through emerging markets. South-east Asia has been hit particularly hard, with the Indonesian and Philippine gauges among the world's worst performing markets outside of Latin America. The region's equities have given up much of the year's gains.
"We're seeing the unwinding of the inflows we saw earlier in the year," says Mr Richardson. "The market didn't expect a Trump victory. The majority of investors have to readjust their portfolios. This will continue for a while."
Emerging-market assets are tumbling on speculation the Federal Reserve will be forced to raise rates faster than expected to contain inflation if the President-elect follows through on a pledge to spend big on infrastructure. Investors are also worried about the extent to which Mr Trump's campaign rhetoric that stressed trade protectionism will translate into actual policy.
With valuations that had been inflated by 2016's developing-nation rally and currencies that are vulnerable to external shocks, there may be further to fall for the four South-east Asian markets. The MSCI South East Asia Index, which also includes Singaporean equities and was at a 13-month high in August, has dropped 6.2 per cent since the US election to the lowest in more than eight months.
The Jakarta Composite Index slumped 6.1 per cent in the last two days to close at a July low. That pared its gain this year to 11 per cent.
The Philippine Stock Exchange Index lost 4.3 per cent and is at the lowest level since March. It's now down 1.2 per cent in 2016.
Thailand's SET Index declined 3 per cent in two days, paring its gain this year to 14 per cent.
The FTSE Bursa Malaysia KLCI Index fell 2.2 per cent to close at the lowest since June 16. That's taken its year-to-date drop to 4.5 per cent.
Mr Robert Ramos, chief investment officer at Union Bank of the Philippines in Manila, said he worked through the weekend crunching numbers and that he's spending a lot of time watching news channels.
In the Philippines, the Trump effect is weighing on a market that's been falling since July amid Asia's highest valuations and investor nervousness over President Rodrigo Duterte and his pivot towards China. The US is the nation's largest source of remittances and the Philippine economy has benefited from American companies offshoring business processes, a trend that could be threatened if Mr Trump takes a more economically nationalistic approach.
"We have been rebalancing our portfolio since last month and we are doing a little bit more of that now," said Ramos. "We are buying stocks that we think will have earnings visibility and growth potential like those in infrastructure."
The next Federal Reserve meeting in mid-December now looms especially large for South-east Asia's emerging markets. Futures contracts are pricing in an 84 per cent chance for a rate increase, and the US central bank's outlook for next year will be keenly watched.
"What would be a problem is if in this December meeting we see projected inflation revised higher, and growth forecasts," said Mr James Woods, a Sydney-based investment analyst at Rivkin Securities. "That would be a very negative shock for emerging markets."
Indonesia and Malaysia are especially vulnerable to higher US borrowing costs making their assets less attractive due to the high proportion of foreign money in their sovereign bond markets. Bank Indonesia said it intervened to stabilise the rupiah on Friday after it fell as much as 3.1 per cent, while Bank Negara Malaysia said it would act to avoid extreme volatility. The ringgit has weakened 3.1 per cent since Nov 8, while the rupiah has lost 2.1 per cent.
Mr Jeffrosenberg Tan, a director at PT Sinarmas Sekuritas in Jakarta, said he was spending a lot more time since the US election briefing agitated clients.
"Indonesia is vulnerable to this strong dollar environment, especially with the high foreign ownership of our government bonds," he said. "It all provides incentives for foreign investors to take profit from our market."
A Trump presidency adds an extra layer of anxiety for investors in stocks in Thailand, where the nation is still in mourning following the death of the King.
"We're working around the clock now as the volatility has been extremely high," said Mr Narongsak Plodmechai, the Bangkok-based chief investment officer at SCB Asset Management Co, which oversees around US$37 billion. "There remains a lot of uncertainty about the new US administration's economic policies," he said, adding that he viewed the sell-off as overdone.
Mr Raymond Kong, who oversees US$2.5 billion as a fund manager at One Asia Investment Partners in Singapore, isn't so sure. He said he'd raised the proportion of cash in his portfolio to 50 per cent from about 20 per cent last month and now holds very few South-east Asian stocks.
"We're keeping our powder dry," said Mr Kong. "If we see more falls, then we'll start buying."
For Samsung Asset's Richardson, the Trump victory has made forecasting far more complicated. He said he was adding to Singapore banks and palm oil producers.
"These are interesting times," he said. "It's never ending. I don't know what's going to happen next."