By ABHRAJIT GANGOPADHYAY And NOPPARAT CHAICHALEARMMONGKOL CONNECT Stocks and currencies fell in Southeast Asia's major markets Tuesday, reflecting concern that foreign investors and firms will be investing less in the region as they shift their focus to opportunities for better growth and returns in developed economies. The Stock Exchange of Thailand's composite index tracked steep declines in Indonesian stock prices, slipping 2.8% to reach its lowest level in eight weeks by midday. The selloff started Monday after the Thai government's economic planning agency reported second-quarter gross domestic product growth of only 2.8% compared with a year earlier. GDP declined 0.3% on quarter. Funds have been perceptibly drifting out of emerging markets and into developed markets, which are showing signs of recovery, said Komsorn Prakopphol, an analyst at Tisco Financial Group TISCO.TH -5.63% . Mr. Komsorn said that although growth potential in Asia will continue to make it "an interesting investment destination over the long term," the short-term prognosis is for the outflow of funds to continue. Meanwhile, the Thai currency lost ground against the dollar, weakening by more than 1% Tuesday. It hit a low of 31.74 baht per dollar around 0310 GMT, its weakest level in more than a year. Malaysia's shares fell as much as 2%, while the ringgit swooned to a fresh three-year low against the U.S. dollar. The benchmark FBM KLCI has shed 2.8% over the past five sessions to end Tuesday at 1745.42. So far this year, it has eked out a 3.5% rise compared with a 10% gain over the course of 2012. "The weakness isn't specific to Malaysia, as there is a massive outflow of funds from emerging markets" around the world, said the chief investment officer at TA Investment Management, Choo Swee Kee, who manages the equivalent of 700 million ringgit ($213 million) in Malaysian assets. The ringgit declined against the greenback for a seventh straight session. Investors say they are worried that a shrinking trade surplus will squeeze Malaysia's current-account surplus and possibly push it into deficit territory for the first time since 1997. Bank Negara Malaysia will release data on second-quarter economic growth and balance of payments on Wednesday. Earlier Tuesday, Bank Negara Malaysia intervened to rescue the currency from a sharp decline, foreign-exchange dealers said. The central bank is suspected to have sold more than a billion dollars in the spot market after the ringgit touched 3.30 to a dollar, dealers familiar with its actions said. Bank Negara Malaysia doesn't comment on interventions. It has said that when it takes actions, they are only aimed at reducing market volatility. "At the moment, there is a lot of momentum behind the [dollar] rally, and it is hard to identify any significant changes that could reverse its direction," said Goh Khoon, a senior foreign-exchange strategist at ANZ Bank.

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