SET chief al­lays fears as stocks plum­met



THE STOCK EX­CHANGE of Thai­land In­dex plunged 2.26 per cent yes­ter­day, clos­ing at 1,682.89 points, in keep­ing with trends across Asia fol­low­ing the tum­bling of the US stock mar­ket on Wed­nes­day night.

For­eign in­vestors dumped Thai stocks worth Bt10.6 bil­lion in a sin­gle day of trad­ing yes­ter­day.

How­ever, the Thai bond mar­ket has be­come a safe haven for in­vestors amid eq­uity sell-offs world­wide. For­eign in­vestors this year poured Bt113.4 bil­lion into the bond mar­ket, in con­trast with the Bt239.3 bil­lion year-to-date out­flow from the stock mar­ket.

The sharp fall prompted the SET to is­sue a state­ment aimed at calm­ing mar­ket sentiment.

SET pres­i­dent Pakorn Pee­tathawatchai said the fall in Thai shares yes­ter­day was trig­gered by ex­ter­nal fac­tors and the slump was com­par­a­tively lower than in most mar­kets in the re­gion.

“It is only short-term vo­latil­ity as Thai­land’s eco­nomic fun­da­men­tals are sound, the per­for­mance of listed com­pa­nies re­mains good and their fi­nan­cial po­si­tions are strong,” he said.

He sug­gested that in­vestors should con­sider in­vest­ing in com­pa­nies with strong fun­da­men­tals and with po­ten­tial for growth in the fu­ture. In­vestors are ad­vised to closely fol­low lat­est de­vel­op­ments in the coun­try and over­seas, in or­der to be well pre­pared for the chang­ing mar­ket en­vi­ron­ment, he added.

Pi­pat Lueng­naruemitchai, as­sis­tant man­ag­ing direc­tor at Pha­tra Se­cu­ri­ties, said the 3-4 per cent US mar­ket fall had sparked the global mar­ket flight. Look­ing ahead, there are a lot of head­winds, as in­vestors are afraid of the im­pact of the trade war on the global econ­omy, high in­fla­tion in the US, jump in US Trea­sury yields and signs of slow growth in US cor­po­rate earn­ings. AFP re­ported that Tokyo’s bench­mark in­dex closed down nearly 4 per cent yes­ter­day, as US Pres­i­dent Don­ald Trump said the Fed­eral Re­serve had “gone crazy” with plans for higher in­ter­est rates.

The Nikkei 225 in­dex plunged 3.89 per cent, or 915.18 points, to end at 22,590.86, while the broader Topix in­dex shed 3.52 per cent, or 62.00 points, to 1,701.86. Chi­nese stock mar­kets plunged to their low­est lev­els in four years.

The bench­mark Shang­hai Com­pos­ite In­dex dropped 5.22 per cent, or 142.38 points, to 2,583.46, mark­ing the low­est level since Novem­ber 2014.

The Shen­zhen Com­pos­ite In­dex, which tracks stocks on China’s sec­ond ex­change, plum­meted 6.45 per cent, or 89.15 points, to 1,293.90, the low­est point since Septem­ber 2014.

While for­eign in­vestors were net sell­ers of Thai shares worth Bt10.56 bil­lion yes­ter­day, they bought Thai bonds worth Bt4.85 bil­lion on the same day.

“Thai bonds have be­come a safe haven for in­vestors due to the stronger eco­nomic fun­da­men­tals when com­pared with other emerg­ing coun­tries which mostly suf­fered from cap­i­tal out­flows,” said Tada Phut­ti­tada, pres­i­dent of the Thai Bond Mar­ket As­so­ci­a­tion (ThaiBMA).

For­eign in­vestors con­tinue to buy Thai gov­ern­ment bonds and bonds is­sued by the Bank of Thai­land. “Thai bond yields have started to rise with US bond yields, but the un­usual thing is that the Thai bond yield is lower than the US; for in­stance the 10-year Thai bond yield was 2.84 per cent, against the US Trea­sury yield of 3.22 per cent. Usu­ally, the bond yields of de­vel­op­ing mar­ket such as Thai­land would be higher than a de­vel­oped mar­ket such as the US,” said Tada. The Thai bond yield has been lower than the US Trea­sury since the fourth quar­ter of last year.

It is be­cause the mar­ket be­lieves the US econ­omy has peaked and would slow down in later years, Tada said.

In­fla­tion in the US in the next 10 years might be higher than the in­fla­tion rate in Thai­land. In­fla­tion in the US is cur­rently at about 2 per cent com­pared with 1.3 per cent in Thai­land, mak­ing the real value of Thai bond higher than the US Trea­sury and mak­ing Thai bonds at­trac­tive for in­vest­ment, said Ariya Ti­ranaprakit, ex­ec­u­tive vice pres­i­dent of the ThaiBMA.

The in­creased in tar­iffs on Chi­nese goods by the Trump ad­min­is­tra­tion has partly con­trib­uted to the in­crease in in­fla­tion in the US. The US tax cut also con­trib­uted to the rapid rise in in­fla­tion.

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