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QE tapering top issue for Asian bourses

THE STOCK Exchange of Thailand expects to continue to experience fluctuations as both local and foreign investors are concerned about the tapering of the United States' quantitative easing (QE) and the current political situation in Thailand.

Unstable monetary policy in US continues to be the biggest challenge for the stock markets in this region, but Thailand has also faced heavy selling by foreign investors in November and the first two weeks of this month, partly due to local political problems.

"In November, foreign net-sells reached Bt48.605 billion, but this trend is in accordance with our neighbours such as the Philippines and Indonesia," said Kiatipong Ariyapruchya, a director of the SET.

"Meanwhile the SET Index closed at 1,371.13 points [at the end of November], which was 4.97 per cent lower than at the end of October, and the average total trading per day for the SET and the Market for Alternative Investment is Bt35.025 billion, which was 10.37 percent less than in the previous month."

The SET revealed that in the first 11 months of the year foreign net-sells reached Bt153.943 billion, then Bt48.605 billion in November and Bt33 billion in the first two weeks of this month.

Average net trading value in the first 11 months for institutions was Bt90.659 billion, for the proprietary segment Bt1.089 billion, for foreign traders negative-Bt153.943 billion, and for individuals Bt62.195 billion.

SET market capitalisation in November was Bt12,023,026 million and Bt182,732 million for the MAI, which were 4.54 per cent and 3.46 percent lower than October respectively.

The forward price-to-earnings ratio for the SET in November was 14.20 times, lower than the previous month but still higher than the average in this region, which was 13.75 times.

MAI

The forward P/E ratio for the MAI in November was 20.52 times.

The SET yield rate in November was 3.17 per cent and 1.75 per cent for the MAI, an increase from October for both markets.

Kiatipong sees concerns about QE tapering by the US Federal Reserve as the main reason for market fluctuation and the out flow from net-sells, not the current political situation. However, he does not believe that the issue this time will have such a profound effect on the stock markets as in June, when the yield of US Treasuries increased by 100 basis points and the outflow from net-sells reached Bt55 billion.

"US Fed tapering will not be so surprising this time," he said.

Kiatipong explained that US economy was recovering and QE tapering would result in a shift of investment out of Asia and back into the United States.

However, since that process is already under way, the effect on the Asian markets will not be so severe this time and will only be short-term.


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