Stock market will stabilise now 'hot funds' have left, says Kittiratt

The Thai stock market is likely to settle down now the "hot funds" which earlier flowed into the country have flowed out, leaving only long-term investors, Finance Minister Kittiratt Na Ranong said on Wednesday.

The Stock Exchange of Thailand continues to drop but some see it as opportunity for investment. (Bangkok Post file photo)

He expected the plunge in the stock market, with the SET index below the strong resistance line of 1,300 points, would stimulate the interest of value investors, who would buy good stocks as a long-term investment.

Mr Kittiratt said the Stock Exchange of Thailand (SET) daily transaction statistics showed the value of the net sell-off by foreign investors has been constantly falling. It  was likely to become a net-buy stituation in the near future. Net sales by foreign investors totalled 890 million baht on Tuesday.

For the period Aug 1-27, total net sales by foreign investors was 37.3 billion baht, with the total of net sales by foreign investors from Jan 1 to  Aug 27 at 113.4 billion baht.

He believed professional investors would see the stock price fluctuation as normal. The sharp drop in the stock market was seen in a different perspective by people who have already invested and by people who still see opportunity in the SET. 

The positive performance of listed companies could be interpreted as a "good signal" for the Thai stock market, Mr Kittiratt said.

The central bank also sees no problems with the foreign fund outflow, Bank of Thailand governor Prasarn Trairatvorakul said.

He was confident Thailand has sufficient foreign reserves, and monetary tools, available to counter any possible effect. 

Mr Prasarn said the Thai currency is now moving in line with other currencies in the region.The baht has fallen to slightly over 32 to the US dollar, roughly in line other currencies.

The central bank will keep a close watch and ensure the baht's value does not change too rapidly, he said.

The baht weakened 0.3% to 32.28 per dollar, while yields on 10-year government debt rose three basis points to 4.33%, the highest level since November 2009, according to data compiled by Bloomberg.

With the slump of the SET index, which closed at 1,275.76 points, or down 18.21 points (1.41%) in the afternoon trading session, the Government Pension Fund is see as an institution finding the opportunity to boost its holding of local equities in the wake of the bear bear market, with the benchmark index the lowest in more than a year.

"This is a great buying opportunity," Yingyong Nilasena, chief investment officer of the fund, which manages about $19 billion of assets, said by phone in Bangkok to Bloomberg. "We have increased positions in some stocks recently. We plan to buy some more."

He declined to name specific companies.''

The benchmark SET Index has fallen for 10 days, the longest losing streak since 1998. The gauge has declined more than 20% from this years high as data this month showed the nation entered a recession in the second quarter, while foreign investors sold more than $1 billion of local shares. The SET measure is valued at 11.4 times estimated profit for the next 12 months, the lowest level since July 2012, according to data compiled by Bloomberg.

"Overseas investors are too pessimistic about Thailand," Mr Yingyong said. "Many large-cap stocks are very attractive compared with their earnings outlook."

Mr Yingyong said the slowdown will have a limited impact on the earnings of the companies the fund is buying.

The pension fund, which manages retirement savings for about 1.2 million state employees, had 12.1% of its assets in local equities and 2.7% in emerging markets as of June 30, according to data on its website.

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