Stocks, baht take body blow
text size

Stocks, baht take body blow

Bloodletting continues on Syria, Fed fears

Thai shares plunged below 1,300 points yesterday, marking the longest losing streak since 1998, while the baht fell to a fresh three-year low on concerns that foreign outflows will accelerate as the US mulls a military attack against Syria and domestic growth wanes.

The Stock Exchange of Thailand (SET) retreated for a ninth straight trading day, falling by 2.65% to close at 1,293.97 points in moderate trade worth 37.7 billion baht. Foreign investors were net sellers of 890 million baht, raising year-to-date net selling to 113 billion.

The main index has lost 7.39% this year, sliding 21.6% from the year's peak in May.

The baht weakened to 32.15/20 to the US dollar yesterday.

The Philippine Stock Exchange slumped 3.96%, Jakarta tumbled 3.71%, the Bombay bourse fell 3.14%, and equity gauges in Kuwait, Saudi Arabia, Abu Dhabi and Turkey fell at least 2%, while European markets were also reeling as of press time. Foreign investors have pulled US$2.2 billion from equity markets in India, Indonesia, Thailand and the Philippines this month, Bloomberg said.

Panic sales came after the Barack Obama administration vowed to hold Syria's government responsible for using chemical weapons, as its allies moved closer to a decision on retaliatory military strikes.

Thanachart Securities strategist Adisak Phupiphathirungul said capital outflows could depress emerging markets including Thailand, with no end in sight.

"The Thai stock market is attractive in terms of valuations now, but no one can guarantee that those who buy stocks at the current level will not get hurt from further slides," he said, adding that investors should sell on strength and hold more cash.

"I don't see any sign of recovery now."

Chatrapee Tantixalerm, the chief executive of Krungsri Asset Management, said his company estimates the SET will move in a range of 1,200 to 1,650 points for the rest of this year, with a downside bias if local political risks escalate.

Stocks remain the best asset class for returns 1-3 years despite the sharp fall, he said.

Krungsri is maintaining its target for total assets under management at 185 billion baht this year, as it already reached 173 billion as of last Wednesday.

Prapas Tonpibulsak, Krungsri's chief investment officer, said Thai shares remain attractive thanks to their low price-to-earnings ratio, while potential growth sectors are banking and property.

Krungsri slashed this year's gross domestic product forecast to 3.5% from 7%.

Mr Prapas added the Thai economy has not really entered a recession, merely a slowdown from last year's rapid consumption.

Sukit Udomsirikul, the managing director of Maybank Kim Eng Securities (Thailand), said regional markets are under heavy selling pressure due to a spate of negative factors including fretting over the US Federal Reserve's plan to pare its stimulus programme and fears the slumping economies and currencies of India and Indonesia will spread across Asia.

Do you like the content of this article?
COMMENT