Investor funds flee low-tech SET

Investor funds flee low-tech SET

Investors have moved 298 billion baht out of the Stock Exchange of Thailand since the beginning of the year, underlining lingering uncertainties about emerging markets because of the economic downturn and the pandemic.

The portion of foreign investors on the SET also fell this year to 26-27% from 30% last year.

SET president Pakorn Peetathawatchai said the global economic outlook remains uncertain because of pressure from the pandemic and the possibility of a second wave of outbreaks among developing nations.

Until a successful vaccine is rolled out, this risk factor will continue, said Mr Pakorn.

Thai bourses are at a disadvantage because of the lack of technology stocks, a sector that has performed well in during this time and tends to attract foreign funds.

He said many newly listed firms on the SET and the Market for Alternative Investment (MAI) are related to the new economy in areas such as rubber gloves, technology and food.

Other more traditional companies that listed this year have been able to adopt the new normal climate into their business strategies by investing in logistics and healthcare services.

Thai listed firms are well diversified, with 48% of revenue coming from overseas, Mr Pakorn said.

The SET has lost influence from funds flowing out of the market, which has the most liquidity trading in the region.

Mr Pakorn said the market still has various products to attract investors under changing market conditions.

The SET daily average trading volume for the first 10 months was 63.4 billion baht, an increase of 17.9% from the same period last year.

The consumption sector was the only sector that outperformed from last year on the SET, with returns increasing 11.7%, while the financial sector had the highest returns of 34.4% and the SET index dropped 24.4%.

He said the SET will revise its strategy to focus more on the new normal by negotiating with the Securities and Exchange Commission to offer businesses well positioned for the pandemic a special track to list on the SET.

This would entail incentives similar to those given to industrial firms located in privileged zones set by the Board of Investment and the SET will disclose further details soon.

Mr Pakorn said the SET's returns year-to-date decreased by 24%, the highest among other markets in the region. Thai investors can respond by diversifying investment in global stocks and securities through domestic securities firms.

Going forward, the SET will focus on increasing the number of global products that list on the SET to increase Thai investor returns through local brokers. These products include depository receipts, exchange traded-funds and foreign indices derivative warrants.

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