Small speculative bubbles detected
Charamporn Jotikasthira, president of the Stock Exchange of Thailand, conceded yesterday that speculative stocks were blowing up into small bubbles, but said they were an exception.
"The overall market remains good, not in bubbles," he said.
The stock market continued to see speculative stock prices rising, as reflected by increases in cash balances.
More than 60 stocks with a price-to-earnings ratio of over 40 times and no fundamental support were showing small bubbles.
"The SET Index rose from 1,400 points to nearly 1,500 within one month from the end of last year. It would not be strange if the index went to 1,600 points, as it has fundamental support from this year's 14-per-cent earnings-growth estimate," Charamporn said.
Earnings are an indicator of whether there is a bubble, and there will be an earnings announcement this month, he said. The SET Index yesterday fell 16.60 points to 1,474.20 on turnover of Bt57.79 billion, in unison with the drops in stock markets around the world.
Investors need to know how much risk they can tolerate. If stocks keep going up, investors may be requiring to pay for their stock purchases in cash, he said.
Pattera Dilokrungthirapop, chairman of the Association of Securities Companies, said the spikes in the stock market had made some afraid of investing, particularly in small- and medium-cap stocks. Most of those stocks were in the SET100 and did not have proper research by brokerages.
Asco has joined forces with the SET to hire a foreign company to gather information on these companies' financial statements, financial ratios and corporate movements for further analysis by brokerages. The study of 100-250 companies is expected to be launched this month.
Asco will also work with the SET to expand the investor base in the provinces through marketing activities and dissemination of investment knowledge, starting in 10 major provinces.
About 8,000 investment transactions are expected.