Brokers predict that the SET Index will plunge further due to the prolonged political tension and economic slowdown, while hedge funds and long-term fund managers rank Thai stock as the least interesting in Asia.

Capital Nomura Securities (CNS) said in a report released yesterday that the SET was likely to be "sideways down" to 730-727. Therefore, the securities firm suggests investors sell blue-chip stocks - including banks, energy, construction and construction materials - and invest in dividend stocks and stocks that are not affected by the economic slowdown: hospitals, electricity, rentals and industrial estates.

Yesterday, the SET Index plunged 1.1 per cent to 724.41 with a trading volume of Bt13.6 billion.

The impact from the political impasse is expected to be stronger and to hammer confidence in stock investment.

CNS downgraded growth in gross domestic product this year to 4.7 per cent from 5.2 per cent, with growth at 4.3 per cent in the worst-case scenario.

Reasons include a higher Dubai crude price at US$58 (Bt2,257) per barrel from $48, delay in mega-project investment, lower domestic consumption, and prolonged political turmoil.

"Foreign investors are expected to show continual net selling considering the latest views from foreign hedge funds and long-term funds that Thai stocks are ranked the least interesting stocks in the Asia Pacific. In January and February, Thai stocks were ranked in the top three to top five," CNS said.

Portfolio adjustment is likely to be a strong selling force pushing the SET Index down this week. In eight of the last 10 days, foreign net selling totalled Bt6 billion.

A report by Siam City Securities, also released yesterday, said the SET Index was likely to decline at the end of the month as positive factors early this year have already been reflected in stock prices.

In the short-term view, if there is a lack of new positive factors, investors are likely to withdraw profits amid negative news.

In February, foreign net buying was accounted at Bt31.64 billion, but in March the situation turned sour with foreign net selling of Bt10.15 billion.

While retail investors have recorded net buying of Bt13.02 billion so far this month, institutional investors have engaged in net selling of Bt2.86 billion.

The prices of large-capitalisation stocks have declined the most so far, particularly telecommunication stocks with a fall of 13 per cent in March compared to February, due mainly to pricing competition that led to aggressive price promotions. Prices of finance stocks declined by 11 per cent due to overall low trading volume.

Prices of petrochemical stocks declined by 11 per cent, while energy stocks fell 10 per cent.

Small-cap stocks, however, increased.

Household products incr-eased by 9 per cent and agricultural stocks by 5 per cent.

Siriporn Chanjindamanee

The Nation