"Whenever the U.S. Fed increases their policy rates, there are tendencies for capital to go to safer assets, so emerging markets usually suffer some sell-off," said AP Securities analyst Rachelle Cruz.
The sharp retreat across the board on Friday put Southeast Asian stocks on track for weekly losses, with the Philippines <.PSI> heading for a 2.5 percent slump on the week, while Singapore <.STI> was set for an about 1.6 percent drop.
"Whether FOMC was the (de)motivation that derailed the two-day winning streak in equities is perhaps inconclusive; but it is notable that post-elections rally has fumbled," Mizuho said in a note, referring to a rally in global equities after the U.S. midterm election results.
Indonesian shares <.JKSE> dropped 1.5 percent in the session and were set to snap an eight-session winning streak. Consumer goods company Unilever Indonesia fell as much as 4.3 percent to a two-month low.
Singapore stocks fell 1 percent and Thai shares <.SETI> retreated 0.5 percent, both dragged down by losses in oil and gas companies as oil markets on Friday remained weak because rising supply and concerns of an economic slowdown pressured prices, with U.S. crude now down by 20 percent since early October.
Thailand's PTT PCL fell 1.5 percent in the session, while Singapore's Keppel Corp shed nearly 2 percent.
Philippine shares fell as much as 1.2 percent, weighed down by losses in industrials.
DMCI Holdings Inc fell more than 1 percent to its lowest since Oct. 31, while JG Summit Holdings dropped 4 percent to its lowest in three weeks.
(Reporting by Nikhil Subba; Editing by Amrutha Gayathri)
By Nikhil Subba
