Foreigners to continue share sale

Foreign investors have so far this year been net sellers at Bt105 billion. The SET Index yester¬day closed up 0.76 per cent at 654.85 after seeing a sharp fall over the past two days with foreign net sell¬ing of around Bt3 billion each day after the government declared a state of emergency on Tuesday morning.

Brokers said foreign investors are not as perturbed by the People's Alliance for Democracy occupation of Government House as by the dec¬laration of a state of emergency.

"When the government declared the state of emergency and there was the clash between the anti and progovernment protesters, their confidence dropped. They just reduced the port¬folio investment [in the Thai mar¬ket]," said Therdsak Thaveetheeratham, senior vice president, Asia Plus Securities.

His view was echoed by Kosin Sripaiboon, exec¬utive vice presi¬dent of UOB Kay Hian Securities (Thailand).

"An emergency reflects risk. Foreign investors don't fear protests as there are plenty of protests over¬seas. But they fear the state of emer¬gency and violence," Kosin said.

He believes foreign investors will continue to sell Thai shares and they may sell another Bt40 billion. He said the assumption was based on the statistic that foreign investors had a net buy of Bt83 bil¬lion in 2006 and a net buy of Bt55 billion in 2007. In 2008, they have a net sell of around Bt100 billion.

Kosin predicted that if the gov¬ernment withdrew the state of emergency, hedge funds would be the first to return to the Thai mar¬ket but longterm investors would consider the overall situation before entering the market.

Therdsak agreed that foreign investors could sell another Bt40 billion worth of Thai stocks.

The SET Index is expected to reach a bottom of 580600 in the third quarter due mainly to the political factor, said Viwat Techapoonpol, head of the Private Client Group of Tisco Securities.

He also believes foreign investors are expected to sell anoth¬er Bt20 billion worth of stocks in the next few months.

However, he predicts foreign investors will start their significant net buy of Thai stocks in the fourth quarter this year and that the January effect rally will occur in the first quarter next year, which will boost the SET Index by at least 100150 points.

If the government announces a House dissolution, the SET could rebound 3040 points, which offers a good chance to take profits. But the SET will drop again once the index reaches 680688, he said.

He warned that the index will fall again in October when the SET reached its bottom of 580600 and investors can accumulate stocks when the SET falls lower than 630.

Adipong Puttarawigrom, exec¬utive vice president of Merchant Partners Securities, said foreign investors were waiting for the cur¬rent political situation to settle.

Due to the current abnormal sit¬uation, foreign investors sell Thai shares rather than buy, which they usually do in September and the period before the long yearend holidays, he said.