Thai Stocks Set for Worst Week Since September 2011 on Valuation

Thai stocks fell for a fifth day, heading for the biggest weekly slump since September 2011, on concern valuations are expensive and as foreign investors sold domestic equities.

Thailand’s SET Index (SET) slid 1.3 percent to 1,508.78 at 10:52 a.m. in Bangkok, poised for a 5.6 percent weekly loss. The gauge rose to the highest since 1994 last week to trade at 14 times estimated 12-month earnings, the most since Bloomberg began tracking data in 2006. The measure’s 30-day volatility was 13.03 today, a seven-month high, data compiled by Bloomberg show. Bangkok Dusit Medical Services Pcl dropped 1 percent, while Airports of Thailand Pcl, the nation’s largest airport operator, slumped 3.4 percent, bound for the biggest loss since Jan. 31.

“This is just a normal short-term consolidation because of the short-term overprice,” Jessada Sookdhis, chief investment officer at CIMB-Principal Asset Management Co., which oversees about $1 billion of assets, said by phone from Bangkok. “The market is still on a good long-term uptrend.”

Thai stocks have rallied 28 percent in the past year, compared with a 1.9 percent drop in the MSCI Emerging Markets Index (MXEF), as expanding infrastructure investment and consumer spending boosted corporate profits. Overseas investors bought a net $2.5 billion of Thai equities last year, the most since 2010, according to data compiled by Bloomberg.

Overseas investors have sold about $220 million of Thai equities in the past four days, reducing this year’s net purchases to $82.9 million.

Foreign Flows

Foreign inflows helped fuel a 5.4 percent appreciation in the baht in the past 12 months, making it the second-best performer among emerging markets. The currency reached this week its strongest level since the currency’s devaluation in July 1997 sparked the Asian financial crisis. The baht lost 0.1 percent to 29.23 per dollar today.

“The market has done well and some stocks are looking speculative,” Adithep Vanabriksha, head of Thai equities at Aberdeen Asset Management Co., which oversees about $314 billion, said by phone. “The currency is quite strong.”

Special measures to stem rapid appreciation of the baht aren’t needed at the moment, Thai Finance Minister Kittiratt Na- Ranong told reporters in Bangkok this week.

Fitch Ratings raised its assessment on Thailand this month, citing a resilient economy and improving political stability. Prime Minister Yingluck Shinawatra helped defuse tension in 2011 by shelving measures that could allow the return to Thailand of her brother, former prime minister Thaksin Shinawatra, who was ousted in a military coup in 2006.

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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