Hot speculative plays on small- and medium-capitalisation stocks on the Thai share market have begun to slow down in the last month, as they lack fundamental support.
The Stock Exchange of Thailand (SET) index dropped 16.62 points or 1.11% to close at 1,474.20 points yesterday in heavy trade worth 57.8 billion baht.
Local institutional and retail investors were net sellers of 1.2 billion baht and 971 million, respectively.
Brokers were net sellers of 442 million baht.
Foreign investors were net buyers of 1.72 billion baht. Foreigners remain net buyers of 15 billion baht in January but have shown signs of selling off and squaring their position this week.
"The stock market has been moving in an odd way this week as some foreign investors started to sell, while the Thailand Futures Exchange showed a net short position on SET50 futures, which could translate into downside market expectations," said Chai Chirasevenupraphund, the head of research at Capital Nomura Securities.
But the SET has remained bullish for the month with heavy turnover including speculation on small- and mid-cap shares as well as a large influx of foreign funds.
SET president Charamporn Jotikasthira said negative US economic figures on Wednesday depressed markets across the globe including the SET.
"But the US news was not the only reason for the downturn. I think the market is in a transition period, as listed companies will likely perform well with sound dividend payments. Investors will move on fundamentally sound stocks, while speculative shares may see corrections," said Mr Chai.
The SET is still monitoring 60 shares that have a price-to-earnings ratio above 40 times, as it is ready to enforce stricter measures governing the trade of these shares to prevent a bubble in the market.
About the author
- Writer: Darana Chudasri
Position: Business Reporter