STEADY BOURSE
The SET shows resilience and avoids a sharp correction after the previous day’s heavy selloff and Wall Street rout.
The Stock Exchange of Thailand (SET) did not experience a sharp correction yesterday, the prior heavy sell-off did not raise any red flags for the economic growth outlook and listed firms’ earnings remain bullish.
The bourse closed at 1,785.44 points, down 0.17%, in turnover worth 73.9 billion baht.
Yesterday’s decline was minimal compared with the plunges of 0.93% and 1.21% on Monday and Tuesday, respectively.
Foreign investors were net sellers of 3.5 billion baht, with brokerage firms selling 1.9 billion baht worth of shares. On the contrary, institutional investors were net buyers of 3.7 billion baht and retail investors bought 1.7 billion.
A steep correction in the SET has been deemed a “healthy correction” as stock prices parallel their fundamentals more closely, said Voravan Tarapoom, chairwoman of the Federation of Thai Capital Market Organizations (Fetco).
Share prices have risen very quickly and the recent market correction reflects the fair value of share prices, said Mrs Voravan.
The previous sell-off was a market adjustment propelled by fears of rising inflation and interest rate hikes in the US coupled with the dip in cryptocurrency prices, she said.
A technical factor is also liable for the global stock market rout as the CBOE Volatility Index earlier hit 30 points, marking concerns over volatility in the stock market in the near future, said Mrs Voravan.
The index is a popular measure of the stock market’s expectation of volatility, as implied by S&P 500 index options, calculated and published by the Chicago Board Options Exchange.
“However, this is not a sign of an economic recession because both the global
and Thai economies continue to grow, while SET-listed firms still record stable net profit growth,” she said.
A bullish outlook on Thailand’s GDP growth and earnings growth among listed companies are factors that could drive up stock prices in the future, said Mrs Voravan.
The monthly Fetco investor confidence index (ICI) for the next three months increased slightly and remains in bullish territory for the third straight month, said SET senior executive vice-president Santi Kiranand.
January’s ICI stood at 156.62, staying within the index’s bullish range of 120–160,
and rising 1.74% from the previous month’s level of 153.94.
The overall ICI rose slightly as foreign investors and proprietary traders remained very bullish.
The main factors boosting investor confidence are international capital flows, together with regional and domestic economic growth rates, which are expected to expand from last year’s reading, said Mr Santi.
“In January, the SET index jumped to record-breaking highs, closing at 1,838.96 points on Jan 24. Investors remain confident international capital flows will bolster
the stock market with an influx of capital and strengthen the baht, while confidence also remains strong in global and domestic economies, which are projected to grow from last year,” he said.
Factors dampening investor confidence include the possible international capital impact on the foreign exchange rate, with the US dollar weakening while regional currencies continue to appreciate, said Mr Santi.
Another concern is the possibility of accelerating inflation in the US and Europe, and expectations that US interest rates are likely to be raised gradually 3-4 times this year, he said.
Ariya Tiranaprakij, executive vice-president at the Thai Bond Market Association, said year-to-date net outflows from the domestic bond market logged 13.2 billion baht as of Feb 6, while year-to-date net inflows were registered at 50 billion.
Foreign investors have outstanding investment in Thai bonds worth 800-900 billion baht, of which 20% are invested in short-term bonds, said Ms Ariya.
She said the bond market remains of interest, even if the current returns are lower than that of the US for both shortterm and long-term bonds.