SET inches up as investors find bargains
Written by Writer on Wednesday, October 29th, 2008
MARKETS
SET inches up as investors find bargains
NUNTAWUN POLKUAMDEE
Thai shares closed 2.74% higher yesterday as most regional markets gained on bargain-hunting.
An investor at Adkinson Securities views SET prices on a monitor yesterday as bargain-hunting took hold. The SET rose 2.74%while Asian marketssaw limited rallies as investors expect the USFederal Reserve will cut rates today to help struggling businesses.
The Stock Exchange of Thailand index closed at 398.04, up 10.61 points, in moderately active trade worth 16.78 billion baht. The index rose as high as 407.8 points in the early afternoon, but the rally fizzled as investors remained nervous about the domestic and global economic outlook.
The rebound was a welcome respite after three straight losing sessions in which the SET index fell by more than 90 points on fears that the global economic recession would be worse than previously expected.
But expectations that the US Federal Reserve will cut interest rates today after its two-day meeting (an announcement is due at 1:15 am tomorrow Thailand time) helped revive sentiment. Hong Kong led all Asian markets yesterday, gaining 14.4%, while Tokyo’s Nikkei 225 index jumped 6.41%. European markets also rose in early trade.
Analysts said that while the market remained highly nervous and volatile, the sharp declines were beginning to attract bargain-hunters. The SET has lost over half its value this year, and is trading at below six times earnings.
Word that authorities were considering establishing new support funds to help prop up share prices also gave a boost to sentiment.
Energy stocks led trade yesterday, gaining 4.41%, while banks rose 8.33% and tech stocks closed up 0.32%. Retail investors were net buyers of 494.48 billion baht and local institutions 1.66 billion, while foreign investors had a net sell position of 2.15 billion.
Warut Siwasariyanon, deputy managing director at Finansa Securities, said global and local sentiment was better. But he cautioned that it would be at least two quarters before the global economy began to turn around.
Institutional investors and hedge funds were also likely to continue selling assets from emerging markets to meet fund redemptions.
Mr Warut said the US recession would have a definite impact on the manufacturing and services sector, with higher unemployment in 2009 likely to depress domestic economic growth. Exports, meanwhile, have already begun to slow due to the woes in the US and Europe.
Kavee Chukitkasem, head of research at Kasikorn Securities, said yesterday’s rally was fuelled by talk of a government-sponsored support fund for the market.
State policies to encourage PTT Plc, the largest stock on the exchange, to invest up to 20 billion baht in share buybacks in the energy company and its subsidiaries helped sentiment.
“But I think that it’s just going to be a short-term rebound. The market still faces a global liquidity crunch, and funds will continue to sell off shares to hold cash. Investors should take advantage of any rallies to reduce their equity holdings,” Mr Kavee said.
Among the most active stocks yesterday, PTT Exploration and Production gained six baht to 81, PTT rose seven baht to 148 and Bangkok Bank rose 4.50 baht to 63.50.
Bangkok Post
Wednesday October 29, 2008
