THURSDAY, March 28, 2024
nationthailand

SET facing turbulence as foreign investors take profit, cut inflows

SET facing turbulence as foreign investors take profit, cut inflows

The Stock Exchange of Thailand (SET) Index is suffering volatility after foreign investors began taking profit and reducing capital flows into the country.

Over the past two weeks, the index has risen as high as 1,454 points before falling to 1,342 in recent days as foreign and institutional investors bought and then sold stocks in quick succession.
Nuttachart Mekmasin, a research analyst at Trinity Securities, said that foreign investors had bought Thai stocks to take profit in the short term as governments worldwide injected money to relieve the economic impacts of Covid-19.
"Foreign investors started taking profit and reducing capital flows into Thailand and other countries in Asia after the US economy began to improve," he said.
"Several large investment funds are viewing the Thai stock market in a more negative light than other regional markets because the SET’s valuation is the highest among Asian countries."
In contrast, the Thai bond market continues to attract foreign investors because it offers high returns, he added.
"The Thai bond yield is high due to the low inflation rate," he said. "In recent weeks, foreign investors have bought up Bt8 billion in Thai bonds."
Nuttachart predicts the SET will not dip below 1,300, since it has extended its uptick rule on short-selling for another three months.
"However, we have to monitor statements from the US Federal Reserve for signs of a liquidity shortage," he added.
Meanwhile, Sunthorn Thongthip, a senior director at Kasikorn Securities, said this was an opportune time to buy stocks, adding that emerging-market assets may be more interesting than assets in the US market because of the weakening dollar.
"Currently, the SET valuation is high, while growth is lower than other countries," he said. "Capital flows will return to Thailand if the index falls below 1,300 because returns after the index rebounds to 1,440 are expected to be at 13 per cent."
He advised investors to buy stocks whose performance will strengthen in the second half of 2020 if Covid-19 vaccine research progresses well, such as tourism, commodities, property, and commercial bank stocks.
"We expect the Covid-19 vaccine test result on 300 humans to come out by July this year," he added. "If the test result is successful, the index may rise again."

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