Thailand Live Saturday 12 October 2024

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Thai stocks reflect gloomy global trend

By SIRIPORN CHANJINDAMANEE

THE NATION

The Thai stock market yesterday continued to drop sharply, reflecting fears that the US economy was doing worse than expected apart from the worsening European debt crisis.

Local brokers suggested that investors should continue focusing on earnings of some listed companies, which might be downgraded due to the decline in oil and petrochemical product prices.

The SET composite index yesterday tumbled 4.3 per cent in the morning session before closing at 958.16, down 32.43 points or 3.27 per cent. Turnover was brisk at Bt50 billion. Foreigners' net-sell rose to Bt15.8 billion.

Meanwhile, the Thailand Futures Exchange (TFEX) yesterday announced temporary halt of silver futures trading.

All over the world, stocks tumbled amid the bleak global economic outlook. The MSCI All- Country World Index of 45 nations slid into a bear market for the first time in more than two years amid the European debt crisis and the threat of a US recession, according to Bloomberg. The MSCI index has lost more than 20 per cent since peaking on May 2.

"Some listed companies, especially in the oil sector, may be downgraded this quarter on their lower earnings forecasts resulting from inventory loss. There might be also a SET Index review and stock-selling by global hedge funds to lock in the currencies of the emerging market," said Visit Ongpipattanakul, executive committee of Trinity Securities.

SET President Charamporn Jotikasthira said that it is too early to talk about the launch of a stock stability fund. However, SET would closely monitor margin loans, which now amount to Bt31 billion.

"The current situation is not worrying. It will be if it [margin loans] exceeds Bt100 billion," said he.

The SET president said that the stock- market correction is now a repeat of the situation in 2008 after the Lehman Brothers' bankruptcy which sparked foreign sell-offs in Asian stocks totalling Bt158 billion for dollar asset holding.

"Since the beginning of the year, earnings of the Thai stock market are ranked in the second place. Funds are flowing out but it's hard to predict how much the outflows will be or how long the situation will continue," said Charamporn.

Deputy Prime Minister Kittiratt Na-Ranong, former president of the Stock Exchange of Thailand, said yesterday that the nosedive in the Thai market is in line with global bourses.

"I'm convinced that the impact on the Thai market would be short-lived, as [worries about the global economy] have been known for some time," he said.

He also expected the market to recover next week as investors can spend the weekend analysing the fundamentals of the Thai and Asian bourses, which remain strong. He believed that Asia would witness a return of capital flows.

-- The Nation 2011-09-24