Thai Stock Selloff May Draw Foreign Flows, SEC Says

Thai SEC Secretary General Vorapol Socatiyanurak
Vorapol Socatiyanurak, secretary general of the Thai Securities and Exchange Commission. Photographer: Dario Pignatelli/Bloomberg

Thailand may have “another wave” of foreign buying following the biggest two-month selloff in equities in nine months as a revival in domestic consumption and investment shields the economy from Europe’s debt crisis, according to the country’s regulator.

“Global investors must find a place to put their money during this critical time,” Vorapol Socatiyanurak, the secretary general of the Securities & Exchange Commission, said in an interview in Bangkok yesterday. “The crisis in Europe offers an opportunity for Thai equities, which has demonstrated spectacular returns and resiliency from last year’s floods.”

Overseas investors bought more Thai equities than they sold from December to April in the longest stretch of net purchases in more than a year, culminating in a selloff in the past two months on concern Europe’s debt crisis and China’s economic slowdown will curb global growth. The benchmark SET Index has dropped 2.1 percent this quarter, headed for the first decline since the three months to September 30.

The Thai gauge traded at 11.4 times estimated profits in the week ended June 1, the lowest level since January, according to data compiled by Bloomberg. It’s currently trading at 12 times, compared with 16.1 in the Philippines, 13.7 in Indonesia and 14.9 in Malaysia. The SET Index climbed 0.5 percent to close at 1,171.32 today, the highest level since June 20.

Thai Hiccup

Overseas investors have sold 28.3 billion baht ($888 million) of Thai equities in May and June, the most since the August-September period, according to stock exchange data. Foreigners unloaded 58.5 billion baht of stocks during the August-September period. They bought a net 96 billion baht between December 2011 and April 2012.

“Thai shares have suffered a hiccup like other equity markets worldwide on concern about Europe and China,” said Mayuree Chowvikran, the head of research at Maybank Kim Eng Securities (Thailand) Pcl, the nation’s largest stock brokerage. “The strength of consumer demand and investments will boost earnings growth of most listed companies.”

Thailand’s SET Index has gained 16 percent in the past 12 months, Asia’s second-best performer after the Philippines, even as the nation’s worst floods in almost 70 years last year shut plants and shattered consumption.

The economy, the biggest in Southeast Asia after Indonesia, may expand as much as 6 percent in 2012, from 0.1 percent last year, Prime Minister Yingluck Shinawatra said on June 20.

Earnings Growth

Earnings may grow 20 percent in 2013 from an estimated 15 percent this year, Sriyan Pietersz, JPMorgan Chase & Co.’s Bangkok-based head of research for Southeast Asia, said May 30.

The surge in automobile production and tourism earnings has helped the economy counter the slowdown in export demand amid the European debt crisis, said Vorapol. Domestic spending has also increased on rising wages, he said.

Vehicle output last month surged 105 percent to 202,834 units, a monthly record, as Honda Motor Co. and other automakers resumed full production following the natural disaster in late 2011, according to the Thai Automotive Club, a trade group. Foreign direct investment climbed 45 percent in the first five months to 205.6 billion baht, the state Board of Investment said yesterday.

The Thai stock index’s quarterly performance so far is the third-best among benchmark gauges in Southeast Asia. The Philippine Stock Exchange Index has gained 2.9 percent and the FTSE Bursa Malaysia KLCI Index has fallen 0.1 percent.

Provincial Listings

The SEC also expects about 40 companies from other provinces to list their stocks by the end of 2013, said Vorapol. The regulator has targeted companies with headquarters outside Bangkok to increase the number of stocks on the bourse, he said.

“Companies in the provinces are at a serious disadvantage for access to new capital,” said Vorapol. “We are making every attempt to help them list their stocks so they can raise money to improve their competitive advantage.”

Only 7 percent of 489 publicly traded companies on the Stock Exchange of Thailand are based outside Bangkok, he said.

-- Editors: Chan Tien Hin, Tony Jordan

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