Commerce Minister urges investors not to panic as Thai stocks fall sharply

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Commerce Minister urges investors not to panic as Thai stocks fall sharply
TNA 2011-09-27

BANGKOK: - Deputy Prime Minister and Commerce Minister Kittirat Na-Ranong on Monday urged investors not to panic after the Stock Exchange of Thailand (SET) index plunged drastically by over eight percent mid-session on Monday, hitting their lowest level in more than a year.

The SET composite index fell by as much as 8.46 per cent, or 81.08 points, to 877.08 by early afternoon -- the highest one-day percentage drop since Oct 2008, at the beginning of the financial crisis.

The exchange has fluctuated continuously with a reduced volume of buying and selling since last week, which Mr Kittirat later said at a seminar here on the economy and investment on Monday that the situation may have resulted from foreign investor concern.

Most investors dumped their shares to shift investment to other regions as they were unsatisfied with US measures on economic stability and Europe's debt crisis, Mr Kittirat commented.

In an attempt to allay investors' concern, the minister said that Thailand's economic fundamentals remain strong. The situation is being closely monitored by the Thai bourse itself, the commerce ministry and other agencies. He said it is apparently the right time for foreign investors to invest in the Thai bourse.

Meanwhile, Krungsi Asset Management Co Chief Investment Officer Prapas Tonpibulsak said the SET index dropping sharply Monday morning was unusual and should not have resulted from the fragile global economy.

He said the continuous index fall may have resulted from Thai shares in the past two months adjusting less than other regional bourses.

Thai shares fell only 10 per cent, while region-wide stock indices dropped 15-25 per cent.

Mr Prapas asserted that the Thai stock index plunge this time was unlike the 1997 ‘Tom Yum Kung Crisis’ or the 2008 ‘Hamburger Crisis,’ as Thailand's fundamentals remain strong and there are currently a variety of investors in the market.

He urged the government to adopt proactive strategies to help boost the confidence of foreign investors.

Investors viewed the Thai stock index as being in positive territory at 1,200 points. However, Europe's debt woes have caused increasing asset prices, particularly gold, resulting in investors' deep concerns regarding the global economy.

Mr Prapas anticipates the SET index this year might close lower than the previous year at 1,033 points. If Thai share prices continue to drop, it would result in even lower Price-Earnings Ratio (P/E Ratio).

The investment officer also advised investors to commit their funds to the long term of 2-3 years, closely monitor the situation and consider whether to unload their portfolios.

The expansion of losses in stocks was seen all over Asia, for investors were not satisfied with the economic situation worldwide. According to the Associated Press, investors "were left unimpressed by a commitment at the weekend from G20 finance chiefs that they would take strong, coordinated action to tackle the market turmoil."

As the SET closed Monday, the Thai stock index fell 54.10 points or 5.65 per cent to close at 904.06, in trade worth Bt47,630 million. (MCOT online news)