Thai Stocks Slump Most in Asia, Philippines Drops, on Valuations

Thai stocks tumbled the most in Asia and Philippine shares capped their longest losing streak since 2008 amid growing concern that valuations are too expensive after reaching record levels this month.

Thailand’s SET Index dropped 1.6 percent to 1,543.67 at the close in Bangkok, the biggest three-day fall since June. Kasikornbank Pcl, the country’s fourth-largest listed lender by assets, lost 4.2 percent. The Philippine Stock Exchange Index retreated for an eighth day, falling 0.1 percent to 6,419.62, the lowest close since Feb. 1. The gauge fell as much as 1.8 percent earlier. Alliance Global Group Inc. declined 3.7 percent to a seven-week low.

Benchmark equity gauges in the two Southeast Asian nations have surged more than 20 percent during the past year, bucking a 2.4 percent retreat in the MSCI Emerging Markets Index, as growing infrastructure spending and consumer purchases boosted corporate profits. The SET traded at 14 times estimated earnings last week, the highest level since Bloomberg began tracking the data in 2006, while the Philippine multiple reached an all-time high of about 19 times.

“Investors are just playing it safe by getting some money off the table,” said Steve Sevidal, who helps manage $1.04 billion as chief investment officer at Manila-based United Coconut Planters Bank. “It’s a prudent move to cut your weighting when there’s risk aversion and it’s those markets that have a very good run and where valuations are above historical levels that are very susceptible for profit-taking.”

Speculative Inflows

Overseas investors sold a net $88 million of Thai shares during the past two days, data compiled by Bloomberg show. The Philippines recorded five straight days of outflows totaling $125 million, the longest stretch of net withdrawals since October, the data show.

Efforts by Philippine policy makers to curb speculative inflows may reduce demand for the country’s assets, Prakash Sakpal, a Singapore-based economist at ING Groep NV, wrote in a report yesterday. The central bank cut the rate it pays on special deposit accounts last week for a second time this year in an attempt to restrain currency gains.

Thai central bank Governor Prasarn Trairatvorakul said yesterday its monetary policy committee doesn’t plan to hold a special meeting. Thailand and the Philippines are attracting capital inflows as concerns over the upcoming Malaysian election and Indonesia’s current-account deficit prompt investors to avoid neighboring Southeast Asian markets, Prasarn said today.

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. The baht rose 0.5 percent today to 29.17, the strongest level since July 1997.

Thai Growth

Prime Minister Yingluck Shinawatra said March 11 that the government is targeting annual economic growth of 4 percent to 5 percent over the long term, after a 6.4 percent expansion in 2012. The Bank of Thailand raised its 2013 growth forecast in January to 4.9 percent from an October prediction of 4.6 percent and signaled it may revise the estimate higher.

The Philippines’s $225 billion economy expanded at the fastest pace in two years in 2012, surpassing neighbors in Southeast Asia, helped by a record-low 3.5 percent benchmark rate and inflation near the lower end of a 3 percent to 5 percent target range.

Srithai Superware Public Co. lost 3.8 percent to 25.25 baht, the lowest level in more than five months. Khon Kaen Sugar Industry Pcl dropped 5.2 percent to 12.90 baht. Bualuang Securities PCL said in a report today that these companies are among those most affected by the rising baht.

Casino Opening

Kasikornbank retreated 4.2 percent to 206 baht. Alliance Global Group dropped 3.7 percent to 19.88 pesos in Manila. Some investors may be pricing in expected traffic migration from the company’s casino since the opening of a rival casino on March 16, according to Wealth Securities Inc.

Thai and Philippine stock markets may see a temporary selldown in the next few weeks, offering investors a good entry point, Samsung Asset Management Co. fund manager Alan Richardson said in a phone interview from Hong Kong today.

“In the long-term, both countries are still in a virtuous cycle of investment-led growth for the next three years, ahead of the 2015 Asean economic community, so investors are prepared to look at the bigger picture and treat selldowns of more than 10 percent as buying opportunities,” Richardson said.