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Baht/$ 33.40/43
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GOLD |
13,950
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Investors also exit ahead of PAD rally
NUNTAWUN POLKUAMDEE & CHADAMAS CHINMANEEVONG
Thai shares fell for the third straight day yesterday, dropping 3.04% as most Asian markets closed lower following weakness on Wall Street.
The Stock Exchange of Thailand index fell from the opening and breached the 750-point line just before the noon break. Selling continued unchecked in the afternoon, with the index closing at 742.46 points, down 23.28, in trade worth 19.6 billion baht. Energy shares led trade, falling 3.3%, while banks lost 3.64% and property 3.08%.
Foreign investors, who have been net sellers of nearly 40 billion baht worth of stock this year, continued to dump shares yesterday with a net sale position of 2.1 billion baht. Retail investors were net buyers of 1.74 billion baht, while local institutions were net buyers of 390.25 million.
Analysts said domestic political worries and sharp decline in the Chinese markets were the main factors behind yesterday's sell-off.
The Shanghai Composite index fell 6.5% yesterday to 2,748.87, and has now dropped nearly 48% since the beginning of the year. Markets in Japan, Korea and Hong Kong also closed lower.
Investors also retreated from equities ahead of today's showdown between anti-government protesters and security forces.
The People's Alliance for Democracy has vowed to march to Government House to step up pressure for Prime Minister Samak Sundaravej to step down. Police have vowed to block the march, raising fears of possible violence.
State enterprise workers, farm groups, truckers and other special-interest groups have also expressed growing dissatisfaction with the government and have sought aid to help deal with the impact of rising fuel costs and inflation.
Finance Minister Surapong Suebwonglee called on Thais to set aside their differences to focus on the country's economic problems.
''It's the duty of all Thais, not just the government, to help find a solution to the problems,'' he said. ''Whether it is PAD or other protest groups, we all need to turn and focus on the problems, not do anything to further increase the risk to our country's future.''
Patareeya Benjapolchai, the SET president, said domestic politics and deteriorating conditions in the world economy were the main factors behind the declines in the market.
Higher inflation and the trend toward higher interest rates had led investors to slow new investment and consolidate their portfolios to limit risk, she said.
''But I remain confident that the SET remains attractive to investors. For long-term investors, it's a good opportunity to pick up bargains,'' she added.
Paiboon Nalinthrangkurn, executive chairman of Tisco Securities, said foreign investors had sold shares due to concerns of further weakness in the baht as the current account was now likely to turn negative due to the higher cost of imported oil.
Higher interest rates would also dampen economic growth and put further pressure on profit margins.
The baht yesterday closed at 33.4 to the US dollar, down from 33.28 on Wednesday. The currency has dropped nearly 3% since the beginning of the month and is now near a six-month low.
Thailand reported a current account deficit of $1.7 billion in April, due to higher oil prices. Inflation rose to a decade-high at 7.6% in May.
''I think foreign investors who don't really have experience with the Thai market have gradually left,'' Mr Paiboon said.
''But some funds, particularly long-term funds, are still in the market because they understand the [volatile] nature of the Thai environment.''
He said the SET index was now down 13.5% from the end of last year, compared with a maximum cyclical decline of 18% over the past five years, suggesting further weakness was possible.
''I think the right time to start accumulating fundamental stocks may be if the index moves around 730 points. But it's difficult to say when the index would reach its bottom,'' he said.
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