FOREIGN investors have dumped Bt23.51 billion in Thai stocks this month, but a securities analyst sees the market sell-off as a short-term correction.
Based on data from the Stock Exchange of Thailand, trading by foreigners accounted for 34 per cent of the total trade from February 1-12. Local institutional investors bought a net Bt3.41 billion in Thai stocks, but proprietary portfolios sold a net Bt2.63 billion and local retail investors bought a net Bt22.74 billion in shares over that period.
This year, foreign investors have sold Bt29.21 billion in Thai stocks, but local institutional investors have purchased a net Bt8.84 billion in shares and proprietary portfolios bought a net Bt2.76 billion. Local retail investors have also been buying, making a net Bt17.62 billion in purchases.
Paiboon Nalinthrangkurn, chairman of the Investment Analysts Association, viewed the sales by foreigners of more than Bt8 billion late last week as portfolio adjustments by these investors, who saw the prices for large-capitalisation stocks as exceeding fundamentals.
He urged investors to keep a close watch on bond yields, which could exert sustained pressure on the stock market.
"The selling spree by foreign investors was concentrated in big caps, particularly the 20 stocks with the highest market capitalisation. Their prices have risen beyond their fundamentals,” said Paiboon, who is also chief executive officer of Tisco Securities.
Among the stocks of the 20 biggest companies to be hit by foreign selling are those engaged in tourism and consumption and such stocks are expected to gain from the country’s economic recovery, he said, adding that the sell-downs by foreign investors are likely to be short term. A number of the blue chips, especially the banks, remain attractive.
Based on this view, the market correction would not last long, nor would it go too deep, said Paiboon.
The Thai stock market is forecast to return to an upward trend over the next two years, he said, adding that investors would need to monitor the monetary policy direction of the US Federal Reserve and the yields on US government bonds.
The Stock Exchange of Thailand Index gained 0.73 per cent to close at 1,799.45 points yesterday.