FTSE ASEAN index rises 8% in the past three months with financial stocks driving gains

Singapore led a bond rally driven by regional rate cuts and lower U.S. yields.

The FTSE ASEAN Index went up by 8% from August to October, with financial stocks (+9.4%) driving most of the growth.

In its Financial Markets Spotlight Quarterly Report, FTSE Russell said financial stocks benefited from easing monetary policies across ASEAN, as central banks cut interest rates to stimulate economic activity.

Among ASEAN countries, Thailand stood out with a 17.9% increase, driven by unexpected interest rate cuts and government support through the Vayupak Fund.

Interest rate cuts in the region, coupled with lower yields on U.S. Treasury bonds, also fueled a broad rally in ASEAN government bonds over the last three months, led by the Philippines and Singapore.

Initially, the yield gap between ASEAN bonds and U.S. Treasury bonds widened as investors anticipated further U.S. rate cuts, but by late September, it narrowed as U.S. bond yields rose on strong job market data.

In Indonesia, the bond market saw additional support from a narrower yield gap with U.S. bonds, alongside a 0.25% interest rate cut by the central bank and plans to reduce the 2025 budget deficit.