Volatility reigns on uncertain global economic outlook

Written by changthai11 on Tuesday, September 23rd, 2008

STOCKS

NUNTAWUN POLKUAMDEE

Thai shares fell 1.65% yesterday, with investors bearish on the global outlook.

The SET closed yesterday at 614.49, down 10.34 points, in modest turnover worth 13.25 billion baht. Energy stocks led trade, closing down 0.44%, banks fell 3.76% and tech stocks dropped 3.86%.

Foreign investors were net sellers of 48.55 million baht, local institutions were net sellers of 417.42 million and retail investors net buyers of 465.97 million.

Thongmakut Thongyai, head of equity at Citicorp Securities, said equity markets across the region were volatile over uncertainties about the US financial crisis.

The US government has announced plans to seek US$700 billion to buy dud assets from financial institutions.

While declines - the SET is off 27% for the year - have created bargains for many fundamentally solid stocks, analysts said the short-term trend is risky.

Domestic politics, unsettled while several court cases wait judgement, could also affect the markets.

SCB Asset Management suggests investors keep 80% of assets in short-term fixed income and just 20% in stocks.

Patcharin Techakehakit, an SCBAM senior executive vice-president, said the injection of $180 billion in funds by central banks last week could ease tension.

“It’s helped steady the markets for a period. But there remain questions about medium-sized and smaller banks, and the impact the liquidity and credit crunch might have on them,” she said.

“The situation is uncertain. But I think investors should take some risk with equities, considering that the Thai share market has lagged in terms of valuations compared with other regional markets.”