SET slides again on global post-New Year sell-off

STOCKS / CONCERNS ABOUT US ECONOMY PERSIST

SET slides again on global post-New Year sell-off

KRISSANA PARNSOONTHORN

Thai shares slid 1.23% yesterday for a second straight day on the back of foreign selling. The Stock Exchange of Thailand index closed at 832.63 points, down 10.34 points, in trade worth 18.30 billion baht.

The bourse lost 25.47 points in two days after the New Year holidays.

Foreign investors and local institutions made net sales of 2.31 billion baht and 49.32 million baht respectively while retail investors were net buyers of 2.36 billion baht in securities.

Pichai Lertsupongkit, executive vice-president of Thanachart Securities, said investors were very concerned about the state of the US economy after new manufacturing statistics were worse than expectations.

''The US economy may possibly plunge into a recession and the worsening situation is that global oil prices have risen to almost $100 a barrel,'' he said.

US crude yesterday rose two cents from the previous close to $99.64 a barrel in European trade, and hit $100 on Wednesday over supply concerns on reports of violence in Nigeria and Algeria, two Opec exporters. London Brent crude shed three cents to $97.81.

Many leading brokerages have since revised up their average oil price estimates for 2008 to $95 a barrel from $90.

Mr Pichai said rising oil prices and the prospect of a US recession would cause further volatility in the financial markets.

Several international fund managers have adjusted their portfolios by selling Asian stocks and have gradually shifted to lower-risk government bonds. ''In my opinion, foreign sell-offs will continue for a short period until there are new clues pointing that the fragile US economy will improve eventually,'' he added.

The Thai market plunged in line with other Asian bourses, with Hong Kong falling 2.44% yesterday, Taiwan 1.67% and Singapore 1.85%.

Apaporn Sawangpak, assistant research manager of DBS Vickers Securities, said local energy stocks did not benefit from the surge of global oil prices and foreign investors still dumped big-cap energy shares.''Portfolio adjustments are being made as fund managers are preparing to hold cash, as it is widely expected that financial institutions and banks affected by the sub-prime crisis will set aside additional reserves for the second round soon,'' she said.

Mr Pichai said the Thai market was trading at a discount with the price-to-earnings ratio of 11 times compared to 16-17 times for other Asian bourses.

''In fact, the Thai market can move forward if local politics stabilises over the next one or two months,'' he said.