Stock Exchange of Thailand President Charamporn Jotikasthira today urged investors not to panic, saying economic and corporate earnings growth in Southeast Asia’s second-biggest economy remains strong. The benchmark SET Index dropped to two-month low. Philippine Stock Exchange President Hans Sicat described the selloff as an “extreme overreaction.”
The Philippines benchmark index has slumped 11 percent and the Thai gauge 8.4 percent since May 22, when Fed Chairman Ben S. Bernanke said policy makers could consider reducing the pace of monetary stimulus if the nation’s labor market improves. Overseas investors have sold a net $414 million of Thai stocks and $147 million of Philippine shares this month.
“Foreign net selling is an extreme overreaction to Bernanke’s” outlook on possible stimulus cuts, Sicat said in a televised interview with ABS-CBN News today. “Technical corrections tend to be buying opportunities for others who are more conservative.”
The Philippine Stock Exchange Index gained today, adding 0.8 percent to 6,609.01 at the close, after the recent losses cut valuations to 18.3 times projected 12-month earnings, the least expensive since February. Its 50-day volatility measure rose to 21.3 today, the highest level since July.
Thailand’s SET Index declined 1.3 percent to 1,503.50 at 3:30 p.m. in Bangkok, heading for the lowest close since April 10. The measure is trading at 13 times forecast profits, the cheapest since January. Its 50-day volatility gauge climbed to 20.2 today, the highest level since December 2011.
The Thai exchange isn’t planning any measures to contain the slump in share prices, Charamporn said at a press briefing in Bangkok today.
“Trading is still normal,” he said. “Investors should not panic. Thailand’s economic fundamentals and corporate earnings remain strong.”
The Philippines and Thailand, along with Indonesia, led a four-year rally in global stocks as buoyant local economies sent corporate profits to records and the Fed’s debt buying spurred investors to seek higher-yielding assets.
While economic growth in the three nations will remain robust, asset managers including Religare Capital Markets and Samsung Asset Management anticipate more declines as the Fed moves closer to paring its bond purchases.
“I don’t think this the last wave of selling by overseas investors,” Juanis Barredo, a technical analyst at COL Financial Group Inc., the largest Philippine online stock brokerage, said today. “At some point, funds will just stop selling because prices fell too steeply.”
International investors poured $25 billion into the Philippines, Indonesia and Thailand stock markets since Nov. 25, 2008, when the Fed announced its first round of so-called quantitative easing to revive economic growth amid the global financial crisis.
The Jakarta index surged 356 percent from that date through through May 22 and the SET gauge advanced 322 percent. The Philippine measure rose 310 percent, versus a 116 percent gain in the MSCI Emerging Markets Index.
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