Investors fleeing pricey US stocks to pour money into SET, bourse president says

Economy March 15, 2014 00:00

By The Nation

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Foreign capital is expected to return to emerging-market countries, including Thailand, because of high US stock prices, while cancellation of the state of emergency in Bangkok could revive investors' confidence, said the president of the Stock Exchange o

Charamporn Jotikasthira said that from now on, the SET Index would move mainly on external factors, particularly a signal that foreign capital had started moving out of

the US markets after stock prices got too expensive. The market has already factored in the Constitutional Court’s ruling on the government’s Bt2-trillion investment project.

"Foreign investors have returned to purchase Thai stocks because US stocks

became expensive. There is purchasing power [for] stocks in our region, including Thailand," he said.

Foreign investors resumed their purchase of Thai stocks early this month after previous sell-offs.

From the beginning of this year, foreign investors were net sellers of Thai stocks totalling Bt27.5 billion. The SET Index has risen 4.95 per cent from the end of last year.

Charamporn said that if the emergency decree is cancelled, that could boost tourism and investors’ confidence.

The SET will hold roadshows in Britain and Scandinavia in May, Singapore, Hong Kong, the United States and Canada in June, and Hong Kong and Japan in July. The roadshows will include prospects of Thai listed companies’ performance and Thailand’s economic situation and investment in the second half of this year.

This week, Asian stock markets have been on the decline after China announced its February trade deficit last week.

"China’s growth is already moderating and corporate profits continue to be rather disappointing," Bloomberg quoted Mikio Kumada, a Hong Kong-based global strategist at LGT Capital Partners, as saying.

The SET Index rose by 1.68 points to close at 1,372.18 yesterday with trade value Bt31.13 billion.

The MSCI Asia Pacific Index yesterday looked set for a one-month low and a weekly drop of 3.8 per cent, its biggest such decline since May 2012, according to Bloomberg.

The Shanghai Composite Index lost 1 per cent. Data showed Chinese factory output in January and February grew the least since 2009 from a year earlier, while retail sales expanded at the slowest rate since 2004.

The benchmark stock gauge in Australia, which counts China as its biggest trading partner, lost 1.5 per cent. Japan’s Topix index sank 3.2 per cent as the yen strengthen for a fifth day on haven demand.

"Yen strength across the board has been exerting itself as the best way to play risk aversion," Bloomberg quoted Daniel Been, a Sydney-based senior foreign-exchange strategist at Australia & New Zealand Banking Group, as saying.

Investors sought haven assets amid persisting tension ahead of a referendum that may lead to Crimea’s secession from Ukraine.

The benchmark US stock measure on Thursday fell 1.2 per cent, given Chinese data and ongoing tension in Ukraine.

Crimea votes tomorrow on whether to leave Ukraine and join Russia as the US and Germany step up pressure on Moscow over its support for secession, Bloomberg said.

"China’s slowing growth is now confirmed," Bloomberg quoted Attila Vajda, Singapore-based managing director at Project Asia Research & Consulting, as saying. "This combined with other grim headlines such as the Crimea stand-off is definitely making investors pause and take some profit."