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Thailand’s Exchange Chief Says Foreign Selling Caused Stock Drop

Jan. 11 (Bloomberg) -- Thailand’s stock exchange said sales by overseas investors triggered the benchmark index’s biggest one-day drop in almost five months yesterday, and signaled that shares aren’t expected to decline much further.

The SET Index slumped 1.2 percent yesterday as foreign investors sold a net 4.6 billion baht ($152 million) of shares, the most since Oct. 10, according to exchange data. The gauge rose 0.2 percent as of 4:24 p.m. in Bangkok.

Yesterday’s drop “may be partly because of profit taking” by overseas investors, Charamporn Jotikasthira, president of the Stock Exchange of Thailand, told reporters today. “We don’t think these sales are because of capital outflows, they may be portfolio adjustments. We haven’t seen much selling today.”

The SET Index rallied 36 percent in the 12 months to Jan. 9, driving it to the highest level since July 1995. Before yesterday’s drop, the measure traded at 17.7 times reported profit, the highest level since Sept. 28, data compiled by Bloomberg show. The index is valued at an 18 percent premium to the MSCI Asia Pacific Index. Thai companies begin reporting fourth-quarter results today.

Overseas investors bought $2.5 billion more of Thai shares than they sold last year, after net sales of $167 million in 2011, according to data compiled by Bloomberg.

The baht reached a 10-month high today after funds bought $174 million more local shares than they sold this month through yesterday and pumped a net $1.4 billion into sovereign debt, data from the stock exchange and the Thai Bond Market Association showed.

Charamporn said yesterday’s stock decline “isn’t concerning,” because the SET index moved in line with regional peers. The Philippine benchmark index sank 1.2 percent yesterday, while the Jakarta Composite Index lost 1 percent.

To contact the reporters on this story: Tony Jordan in Bangkok at tjordan3@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

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

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