Record trading despite SET plunge, recovery

Thai authorities opted to stay on the sidelines despite a roller-coaster ride in the stock market yesterday, which closed with a record turnover in the exchange’s 40-year history.

Turnover for the first time hit Bt102.66 billion, the highest since the Stock Exchange of Thailand was set up in 1975. Thai shares opened lower in line with regional bourses, then fell in tandem as oil prices were near a five-year low. Finance Minister Sommai Phasee also attributed the fall to an unspecified domestic rumour.

At one point, the SET index nose-dived 138.95 points – just over 9 per cent – to hit a seven-month low. The index staged a strong rebound later, to close at 1,478.49 – down 36.46 points or 2.5 per cent from Friday’s trading. Domestic investors were net buyers of Bt7.58 billion while other types of investors were net sellers. Analysts were caught off-guard, as most did not anticipate such a steep fall. The index has fallen for six straight days.

Sommai insisted that the country’s economic fundamentals were unchanged and strong, and there was no need to come up with measures in response to the situation. “Over time, the stocks will rise along with the mechanisms of the market,” he said.

Stock Exchange president Kesara Manchusree also said there was no need to formulate measures to support the capital market at the moment despite the index’s continued decline.

Kesara said it should be left to the market to stabilise itself after oil fell below US$60 (Bt2,000) per barrel.

She said investors should choose stocks that would benefit from falling oil prices such as shares in airlines and logistics companies. Low oil prices should boost the Thai economy next year, she said.

Prime Minister General Prayut Chan-o-cha said the SET’s sharp drop was a reaction to the world oil situation and the external conflict factors.

“The stock price does not only rise. There will be both ups and downs,” he said. “Some people must suffer from investing in stocks. To reduce the risk, investors should not borrow money to buy stocks.”

 

Plunge in price of crude blamed

The slide in Asian markets came after crashing oil prices dragged US stocks to one of their worst losses of the year on Friday.

The Dow Jones Industrial Average fell 1.8 per cent and the S&P 500 tumbled 1.6 per cent. It was the S&P 500’s first weekly loss in nearly two months and its worst single-week decline – 3.5 per cent – since May 2012.

Lower oil prices benefit consumers, but traders have been unnerved by the speed of the free-fall in crude prices, which could put projects on hold in the oil sector and hurt energy companies and banks.

In Thailand, the banking and energy sectors make up more than a quarter of the exchange’s market capitalisation.

Over the past five trading days, the SET Index has lost 8.2 per cent. That is well below the expected 2015 price-earnings ratio. 

Suffering the most were stocks in the energy, communications, banking, retail, property and food sectors.

“LTF [long-term equity funds] and window dressing are now the last hopes,” Asia Plus Securities said in a research note. 

“The market slump should encourage more investment into LTF, and window dressing at the end of the year should also be more active. 

“In eight of the past 10 years, the SET Index gained an average 2.6 per cent in the past two weeks of the year.”

The index could reach 1,438 points, the securities house said.

An analyst at Kasikorn Securities said the fall of the index yesterday was due mainly to a sharp decline in energy stocks, which weighed about one third of stock market.