Declines seen for SET, baht

The SET Index is expected to slide further next week after a sell-off by investors over the past two days. The index closed down 15.68 points at 1,182.41 yesterday.
The slide was a market correction, as share prices are relatively high, said Thirdsak Thawithiratham, director for securities analysis at Asia Plus Securities Co.
The price/earnings ratio (P/E) is currently 14.7 times, which is relatively high, he said.
The market has seen sideways movement around the 1,200-point level since mid-March, Thirdsak said.
Investors worldwide sold stocks over the past few days on concerns about public debt in Europe as Spain failed to raise funds as planned. Investors were also upset by indications from the US Federal Reserve that no more money would be injected into the economy under the quantitative-easing scheme. These factors have sparked selling in the Thai bourse too.
“The market was previously driven largely by capital inflows, and the inflow is likely to be very limited from now on,” Thirdsak said.
He suggested investors reduce their stockholdings to 40 per cent of their portfolio. Investors should hold automobile, industrial-park, property-fund and food stocks, he said.
The gold price is expected also to be subject to downside pressure as investors hold more US dollars.
The baht will hover around 31 per dollar after weakening since early March, he said. It may not reach 32.
Finance Minister Kittiratt Na-Ranong earlier said the government wanted the baht to weaken, while Bank of Thailand Governor Prasarn Trairatvorakul said he preferred the market mechanism to determine the currency’s level, rather than intervention by authorities.
Praipol Koomsup, an economist at Thammasat University, said it was preferable for the baht to move according to market forces. “Those who previously wanted to see a weaker baht now see it,” he said.