Southeast Asia stocks: Most slip as Sino-U.S. tensions over Hong Kong continue to weigh

Most Southeast Asian markets dropped on Friday, hurt by worries that a U.S. law backing protesters in Chinese-ruled Hong Kong could disrupt ongoing trade negotiations, as the two countries try to strike a deal to diffuse a 16-month long trade war.

All eyes were trained on China, which on Thursday warned of retaliation after U.S. President Donald Trump signed legislation that, among other things, threatened sanctions for human rights violations in Hong Kong.

"Market will continue to wait for potential counter measures from China," an OCBC Treasury Research note said.

Investors were also cautious ahead of official data on China's factory activity due for release on Saturday, which a Reuters poll expects to have contracted for the seventh straight month in November amid sluggish domestic demand.

The Malaysian index led declines in the region, dragged by Sime Darby Plantation Bhd, the world's biggest oil palm planter by land size, which posted a 75% slump in third-quarter profit.

Losses among other big caps such as electricity retailer Tenaga Nasional and lender Hong Leong Bank also weighed on the index.

Philippine stocks closed lower and shed 3% in November to log their worst monthly performance since February. For the session, conglomerate SM Investments shed 0.9% to put pressure on the index.

Thai equities extended falls for a fourth consecutive session and notched a fifth straight month of losses.

Earlier in the day, data released by the country's central bank showed the country's October exports fell 5% year-over-year, while trade surplus narrowed.

The Singapore index edged lower and logged its biggest weekly drop in nearly two months.

During most of the session, losses were contained by gains in Thai Beverage Pcl's shares which rose as much as 5.2% after Bloomberg reported that the Singapore-based brewer was planning an IPO of some of its regional beer assets worth up to $3 billion.

However, the brewer's shares were placed on trading halt by late-afternoon, pending response to a query raised by the stock exchange.

Bucking the trend, Indonesian shares snapped a six-session losing streak to close higher but posted its worst monthly performance in six months.

Data on Indonesia's annual inflation rate for November is expected on Monday, with a Reuters poll showing it is expected to ease slightly and stay comfortably within the central bank's target range.

Vietnamese shares were subdued during the session but posted their worst monthly performance in 11 months.

By Arundhati Dutta