SET plunges below 1,400 as China adds to pressure

SET plunges below 1,400 as China adds to pressure

Thai shares yesterday closed below the 1,400-point level for the first time this year on a continuing sell-off by foreign investors.

Appetite for risk assets in emerging markets has waned after the US Federal Reserve said it would wind down its pump priming.

China's central bank also said there is a reasonable amount of liquidity in the financial system and urged banks to control risks from credit expansion, signalling no relief from a cash squeeze.

The move dashed investors' hope for a looser monetary policy in the world's second largest economy.

The SET index plunged 2.60% to close at 1,364.09 after struggling to close above the 1,400-point mark several times, with moderate trade of 44.02 billion baht.

Following the dip, Tisco Asset Management launched the Tisco Mid-Small Cap Equity fund focusing on investment in listed small and medium-sized stocks.

The fund's subscription runs until July 9 this year.

From early this month to June 21, the SET index dropped by 12.87% while the Market for Alternative Investment index has declined by 17.98%.

Since small- and mid-cap stocks have underperformed the benchmark indices, Tisco thinks now is a good opportunity to invest in good stocks as the fundamentals remain unchanged.

Domestic plays are the fund's target stocks as they will benefit from domestic consumption and private investment, said Saharat Chudsuwan, senior vice- president of Tisco Bank.

He said 80% of the fund will be ploughed into listed small and medium-sized fundamental stocks with market capitalisation of less than 50 billion baht each. The rest will be invested in debt instruments and bank deposits.

Mr Saharat said the market now is highly volatile due to the fund outflows but believed it was only temporary.

Kamonyos Sukhumsuwan, fund manager of Tisco Asset Management, said the Thai stock market moves in line with the TIP group (Thailand, Indonesia and the Philippines).

The ongoing correction presents a buying opportunity, said Mr Kamonyos.

"Tisco forecasts the fair value of the Thai stock market is a price-to-earnings ratio of 15 times, or 1,636 points," he said.

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