Brace of short-term stock market slide

WHILE the Stock Market of Thailand (SET) Index is expected to drop when the markets reopen on Monday this will only be short term, two analysts told Thai News Agency this weekend.

Chaiyot Jiwangkul, research director of Globex Securities, said that the stock market will plunge because of concern after the spate of bomb blasts in seven southern provinces during the long weekend but does not think the selling pressure will be very strong because the government has been able to take good care of the situation and no more blasts occurred after Friday.

For this reason he expect the impact to be short term with the sectors most affected being tourism and hotels because some tourists have cancelled hotel bookings and this sort of incidents shakes their confidence.

Mr Chaiyot expects SET index support to be at 1,540-1,530 points after closing on Thursday at 1,552.64 points, up 4.51% from the day before. If it reaches this level then it would be an opportunity to invest because foreign funds flow to this bourse will likely continue.

The Thai baht is expected to weaken a little on Monday as it would be impacted by stock selling pressure.

Meanwhile Padermpob Songkroh, Kasikorn Securitiies’ managing director for equity wealth management, said that  the Thai stock market is leaning towards a drop due to the bombings in seven provinces but this is expected to only be short term.

However the key factor is that SET index has risen a lot reaching a point where the P/E ratio (price-earning ratio) is as high as 16.5 times making Thai stocks quite expensive and that is why there would be selling pressure especially by foreigners who have bought around 100 billion baht worth of Thai stocks since the beginning of the year.

Moreover there are concerns that the Federal Reserve will hike interest rates sooner than expected, Mr Padermpob added.

Even so, should the SET Index plunge to 1,500 points then this would be an opportunity for investors because it is certain that the Thai economy will grow faster in the second half of this year with this benefiting listed companies.

Mr Padermpob recommends investing in the banking sector because bank stock prices have dipped to the lowest point. Property sector is also worth considering because of signs of increased construction at mid to high pricing points as well as the construction sector because contractors are benefiting from state investment which is increasing in the current second half.


TOP: Stock market quotes in a newspaper. Photo: Andreas Poike

By Thai Residents reporters



Leave a Reply

Your email address will not be published. Required fields are marked *