The stock market continued to be volatile in January, and the trend will likely continue as foreign capital continues to pour in, says the Stock Exchange of Thailand (SET).
"Investors should tread cautiously. They should select stocks based on fundamentals," said Pakorn Peetathawatchai, the head of corporate strategy and finance.
Last month, foreign investors were net buyers of 14.9 billion baht worth of Thai stocks. But from Feb 1-19, they were net sellers of 12 billion baht.
"We've monitored the market closely, and we keep urging investors to be reasonable when making decisions," said Mr Pakorn.
Trading volumes have skyrocketed this year, supported by continued inflows since last November and more activity by local players.
The main SET index ended January at 1,474.2 points, up by 5.91% from the start of the year. Foreign investors were net buyers of US$498 million during the month.
Combined average daily trading volume of the SET and the Market for Alternative Investment (MAI) was 58 billion baht, up by 135% year-on-year.
The SET's daily volume exceeded that of the Singaporean market, which stands at 55-56 billion baht, while daily trading volume of derivatives rose by 56.6% from the end of 2012 at 67,772 contracts per day.
But Mr Pakorn insisted the Thai bourse is not expensive compared with regional markets, as listing companies keep performing well, but it is not as cheap as last year.
As of Jan 31, the forward price-to-earnings (P/E) ratio of the SET was 13.59 times, up from 11.44 a year before but down from 15.50 by the end of last year.
The forward P/E ratio of the MAI rose to 18.07 times from 10.33 a year earlier and 16.58 times at the end of December.
Thailand's ratios were lower than in Malaysia (14.5 times), Indonesia (14.18 times), Singapore (14.78 times) and the Philippines (17.78 times).
The SET's market capitalisation was 12.5 trillion baht, up by 6.01% from the end of 2012, while the MAI's market valuation was 174 billion baht, up by 30.8%.