Retail investors behind SET rally
The Stock Exchange of Thailand yesterday continued to climb to its highest peak since 1994, buoyed by optimism over more monetary easing from Japan and a possible cut in the Bank of Thailand's policy rate.Retail investors, highly sensitive to market movements, were cited as the major driver of the SET Index, which ended at the 18-year high of 1,526.74 points amid brisk turnover of Bt58 billion, after Bt72 billion on the previous day.
Other stock markets in the region also advanced. While they were boosted by expectations that the new Bank of Japan governor would act on Prime Minister Shinzo Abe's advice to boost the economy, the Thai market is believed to have fallen under the spell of speculation. However, authorities here said they planned no action.
After the Securities and Exchange Commission (SEC) chief came out on Wednesday saying that there would be no more steps to tame the bull market, Deputy Prime Minister Kittiratt Na-Ranong, who is also the finance minister, supported that course.
Kittiratt yesterday insisted that the stock market was not yet overheating, as the rally was founded on economic fundamentals. The economy is heading up thanks to the government's stimulus measures as well as the investment mega-projects coming up later this year - such as the Bt350-million water-management plan and Bt2.27-trillion infrastructure plan. Listed companies have also shown impressive earnings growth. The SEC and the SET have measures in place.
"As a former SET president, I know that the SEC and SET have tools to control and prevent speculation to some extent. Be warned that speculating on share prices could lead to a lot of grief," he said.
Asia Plus Securities reckoned in its research that foreign net-buys of Bt823 million on Wednesday were insignificant and did not indicate a true return of foreign investors. Yesterday, foreign investors were net sellers by Bt71 million. Their turnover is now less than 15 per cent of the market's total, while retail trades were nearly 70 per cent.
"This indicates that there could be possible sell-offs," it said in a research note. "It also indicates that the market is being [put] under the force of speculation and volatility will be greater," it said.
So far this month, foreign net-sells have reached Bt11.17 billion, narrowing the year-to-date net-buys to Bt3.86 billion.
Foreign inflows into Thai equities have fallen this month, when the world's 20 major economies meet today in Moscow. Top of the Group of 20's concerns is a possible global war in which nations weaken their currencies to boost exports.
"It will be one of the most important [G20 meetings] for quite some time in terms of markets," said Sean Callow, senior currency strategist at Westpac Institutional Bank in Sydney. "The risk for currencies is whether there are strong comments from some of the many officials, with their different viewpoints," he told Dow Jones Newswires.
Talk has centred on Japan's recent push to pump more cash into the markets to kick-start the economy and inflation, which has in turn sent the yen tumbling. Yesterday, the Bank of Japan wrapped up a two-day policy meeting, deciding to maintain rates at 0-0.10 per cent and releasing an upbeat assessment of the economy, saying it appeared to have stopped weakening.
"Exports continue to decrease, but the pace of decrease has been moderating," it said.