Thailand's Stocks Enter Bear Market as Foreigners Pull Out

Thai stocks fell, with the benchmark equity index entering a bear market, as concern over the health of the nation’s economy and the prospect of higher U.S. borrowing costs spurred foreign selling.

The SET Index dropped 1.3 percent to 1,280.92 at the close in Bangkok, taking losses from its Feb. 13 high to 21 percent. International investors have pulled $3.6 billion so far in 2015, the most among eight Asian markets tracked by Bloomberg, following outflows of more than $7.3 billion in the previous two years.

Thailand’s large domestic investors such as the Social Security Office and the Government Pension Fund have been boosting their overseas exposure amid tepid returns from the nation’s equities. Futures indicate a 78 percent probability that the Federal Reserve will raise its benchmark policy rates this month from near zero in a move that could affect money flows into emerging markets.

PTT Pcl, the nation’s largest energy company that’s been battered by crude oil’s drop to six-year lows, declined 5.2 percent to a five-year low. Advanced Info Service Pcl slid 3.8 percent and True Corp. Pcl retreated 5.5 percent, pacing losses for telecommunication shares. The two companies have slumped over the past month on concern they overpaid in a government auction for airwaves needed to provide fourth-generation mobile services.

Most Thai economic indicators have weakened this year as exports shrink and the government struggles to spur local demand, leaving tourism and state spending to drive the economy. The Bank of Thailand in November kept its key interest rate unchanged for a fourth straight meeting as it waits to assess whether government stimulus spending will succeed in boosting weak local demand.

The SET Index trades at 12.5 times its projected 12-month earnings, compared with a multiple of 10.8 for the MSCI Emerging Markets Index.

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