• 
• 

Published on January 17, 2008

Even though Thai shares have been among the worst performers in the region since the beginning of the new year, the worst is not yet over.

A spate of negative factors, including prevailing nervousness over Thailand's political uncertainty, the sell-off across Asia by foreign investors to offset losses from the US sub-prime fiasco and the rising evidence of a US recession, continued to hammer the Thai stock market yesterday. It fell another 0.77 per cent.

The Stock Exchange of Thailand (SET) Index dipped 2.84 per cent at one point yesterday before bounding back to close at 773.80 points. Turnover was moderate at Bt21.09 billion.

Citigroup's net loss of almost US$10 billion (Bt331 billion) in last year's fourth quarter from US sub-prime investments and anticipation that more financial institutions will share the same fate triggered a fresh round of heavy selling.

The US worries were also felt on other Asian stock markets yesterday. Hong Kong's benchmark Hang Seng Index was the hardest hit, losing 5.4 per cent. The Tokyo Stock Exchange's benchmark Nikkei 225 Index fell 3.35 per cent, Taiwan's Weighted Index was off almost 3 per cent, the benchmark Shanghai Composite Index, covering both A and B shares, slumped 2.81 per cent, and the Kospi Index slid 2.4 per cent.

So far this year, the SET Index has fallen 9 per cent, following the Hang Seng, which has dropped 12.09 per cent, and the South Korean stock market, which has fallen 10.13 per cent. Stock markets in China's red-hot economy have bucked the trend, edging up 0.55 per cent.

Blue-chip Thai stocks were under selling pressure yesterday. PTT fell 1.3 per cent to Bt304, off the day's trough of Bt290, because of unsettled rental fees for its three natural-gas pipelines. Thoresen Thai Agencies slid 2.78 per cent to Bt35 following the faltering Baltic Dry Index.

Despite the foreign investors' selling spree, the baht has strengthened about 1.6 per cent since the end of last year.

"The stock market has slumped at a faster pace than we expected. No one can predict where the bottom lies. Foreign investors' selling pressure has not finished yet," said Poranee Thongyen, head of research at Asia Plus Securities.

She believes the SET Index will fall below 750 points this week.

The Thai stock market's price-to-earnings ratio is a bit above 10, but it was once at about 8, so a further steep slump is possible, she said.

Kim Eng Securities (Thailand) CEO Montree Sornpaisarn said his firm estimated a support level of 700 points and resistance at 1,000 points.

"The Thai stock market is under pressure from a string of negative factors, and that's why the SET Index is quite volatile," he said. "Investors should hold 50 per cent of their investment portfolios in cash and snap up good fundamental stocks when their prices are weak. Energy stocks are still appealing, because oil prices remain high," he said.

Government Pension Fund secretary-general Visit Tantisunthorn said the fund planned to make higher foreign investments, in order to avoid risks from fluctuations in the value of the baht.

The diversified investment portfolio is aimed at mitigating risk from capital mobility this year, he said.

Oranan Paweewun

 Siriporn Chanjindamanee

 The Nation