Foreign investors sold a net of 6.4 billion baht in Thai stocks, totaling 13.3 billion over three consecutive days. Brokers point to concerns over the slow recovery of the Thai economy, high stock prices, domestic political issues, and MSCI's weight reduction. TISCO Securities predicts continued selling.

The Thai stock market index saw a significant drop yesterday (August 31), hitting a low of 1,308.73 points before closing at 1,310.66 points, down 12.65 points or 0.96%. This decline was influenced by several factors, including MSCI's weight adjustment, high valuations of Thai stocks, concerns about domestic politics, the slow recovery of the Thai economy, fears of a second wave of COVID-19, and rising tensions between the US and China.

As a result, foreign investors sold a net of 6,407.80 million baht, marking the third consecutive day of selling, totaling 13,295.16 million baht. Meanwhile, domestic institutional investors bought a net of 1,311.39 million baht, and retail investors purchased a net of 4,909.05 million baht, with brokerage accounts buying a net of 187.36 million baht.

Mr. Kittichan Sirisukacha, Senior Director of Research at CGS-CIMB Securities (Thailand) Co., Ltd., stated that foreign investors are expected to sell Thai stocks worth 6.4 billion baht due to multiple factors, including MSCI's weight reduction, concerns over the slow recovery of the Thai economy, and the strengthening baht affecting exports, which in turn impacts economic recovery. Additionally, domestic political factors are expected to weigh more heavily on the index in September due to a major protest scheduled for September 19, along with fears of a second COVID-19 outbreak as neighboring countries report rising infections, leading to considerations of closing border checkpoints. Furthermore, the second-quarter earnings results of listed companies were disappointing, making the valuation of the Thai stock market less attractive, prompting foreign investors to adjust their portfolios by selling Thai stocks.

It is anticipated that foreign investors will continue to sell Thai stocks as there have been no positive factors to support the market since the beginning of the year. From January to August 2020, foreign investors have sold a net total of 254,484.69 million baht in Thai stocks, nearing the record high of 287 billion baht in 2018.

For the outlook of the Thai stock market today (September 1), it is expected to rebound after the significant drop yesterday, with support at 1,293 points and resistance at 1,315-1,320 points.

Mr. Sunthorn Thongthip, Senior Director at Kasikorn Securities, revealed that the decline in the Thai stock market index today is likely being pressured by foreign selling, which amounted to 6.4 billion baht. Part of this is due to portfolio adjustments following the MSCI index, which was initially expected to reduce the weight of Thai stocks by 0.01%, or around 600 million baht.

However, the selling pressure exceeding expectations may be attributed to increasing domestic political uncertainties, while the domestic economy is also showing signs of a slow recovery, as Thailand relies on foreign income for about 20%, while the country remains closed.

Additionally, concerns regarding COVID-19, which is surging in Myanmar, may further pressure the market, as Thailand imports a significant amount of labor from Myanmar, posing a risk of outbreaks. This could also impact the supply chain and lead to rising labor costs.

Mr. Apichart Pooncherdkul, Senior Director of Strategic Analysis at TISCO Securities, noted that the trend of foreign investors selling in the Thai stock market is likely to continue. In the past two trading days (August 27-28), foreign investors sold over 3 billion baht each day, driven by concerns over tensions in the South China Sea between the US and China, which remain unresolved, along with MSCI's weight reduction and increasing negative political factors in the country.

Currently, there are no positive factors encouraging foreign investors to return to net buying, as Thailand is still under a state of emergency, leading some funds with policies against investing in countries under emergency decrees to refrain from new investments.

SOURCE : www.bangkokbiznews.com