New year starts with foreign selling spree

New year starts with foreign selling spree

UMESH PANDEY

Thailand's equity markets took a beating yesterday amid a selling spree by foreign investors after years of gains, said market watchers.

The benchmark SET Index ended the day down 15.13 points at 842.97, in thin trade worth 12.9 billion baht.

''There is no concern other than the US economy,'' said Poramet Thonbua, head of research at Tisco Securities.

US markets on the last trading day of 2007 ended down 101.05 points at 13,264.82, prompting all other regional markets to slide yesterday. Most major markets including Singapore, Hong Kong and South Korea were down.

''There is continued profit-taking and outflows of funds from the region and in preparation for the possible need of liquidity by funds in the US as the market continues to remain volatile there,'' said Adisak Kamool, head of research at KGI Securities.

''Foreigners are cashing out and are likely to continue to do so over the next few days as Thailand's market has performed better than the global average.''

The SET Index ended 2007 up 26.2% against the global average of 24.5% and with a weakened global economic out look, funds are gradually cashing out.

''They (foreign investors) have been selling since October and in December were net sellers of more than 15 billion baht and in the last eight trading days sold more than 1.7 billion baht worth,'' Mr Adisak said.

''If you look at the 'January effect' it is either positive or negative. Positive means that the portfolio adjustments are in favour of buying Thai assets and negative if the adjustments are for the sale of Thai shares, and under the current situation it looks more like the latter.''

Foreign investors were net buyers of just over 55 billion baht in Thai securities in 2007, despite net sales of 15 billion baht in December alone.

The negative sentiment has been compounded in Thailand by continued uncertainty over the political situation as various parties jockey for power.

''There is some impact from the political developments in Thailand as well, as the announcement by the PPP (People Power Party) to form a government with 254 seats is being considered good economically but slightly negative on the political front amid fears of continued tensions going forward,'' Mr Poramet said.

The PPP has already announced the formation of a four-party coalition government, commanding 254 seats in parliament. The three smaller parties are Ruam Jai Thai Chart Pattana, Matchimathipataya and Pracharaj.

The PPP said it could not wait until tomorrow when the Election Commission (EC) announces final results because it feared a campaign to undermine its efforts to form a new government.

Market watchers said that technically, the market's current support level is 850 points. If it falls below that level, the next support is at 830 points.