Thai Stocks Slump 21% From High in Longest Decline Since 1998

Thai stocks retreated for a ninth day, sending the benchmark index down more than 20 percent from this year’s high, amid concern foreign outflows will accelerate as the economy weakens. The baht and government bonds dropped.

The benchmark SET Index lost 2.7 percent to close at 1,293.97 in Bangkok, its longest losing streak since 1998. Siam Cement Pcl and Total Access Communication Pcl dropped more than 3.6 percent and were among the biggest drags on the index. The baht weakened 0.8 percent to 32.18 per dollar, while the yield on 10-year government debt rose 14 basis points to 4.29 percent, the highest level since December 2009.

Thailand entered a recession in the second quarter, according to figures released this month, while data yesterday showed exports unexpectedly fell last month. Southeast Asia’s second-biggest economy will probably post a current-account deficit of $550 million in July, according to a Bloomberg survey of economists.

“Companies with revenue from domestic markets should be affected by weak economic growth,” Jintana Mekintharanggur, director of equity investment at Manulife Asset Management Co. in Bangkok, which has about $200 million of assets, said by phone. “Overseas investors are unlikely to bring money back into equity markets in Thailand and the region until there are signs of strong economic growth.”

Fund Outflows

Overseas investors sold about $1.1 billion of Thai stocks and $1.2 billion of local bonds this month amid speculation that the U.S. Federal Reserve will reduce monetary stimulus this year. Outflows from Indonesian shares totaled $442 million, while investors withdrew $163 million from Philippine equities.

The three Southeast Asian markets led a four-year rally in global shares through May as growing local economies sent corporate profits to record highs and Fed stimulus spurred international investors to seek riskier assets. The SET index has dropped 21 percent from its May 21 closing high.

Thailand’s gross domestic product unexpectedly shrank 0.3 percent in the three months through June from the previous quarter, when it contracted a revised 1.7 percent, the National Economic & Social Development Board said on Aug. 19. The state agency cut its full-year expansion forecast to as little as 3.8 percent from a previous estimate of 4.2 percent. It lowered its export growth target to 5 percent from 7.6 percent.

Lower Valuations

Overseas shipments in July dropped 1.5 percent from a year earlier to $19.06 billion, the commerce ministry said yesterday. Economists had expected a 0.8 percent increase, according to a Bloomberg survey. The country posted a trade deficit of $2.28 billion last month, compared with an estimate of $2.03 billion.

“Global investors are worried about slowing growth in the region,” Kasamapon Hamnilrat, head of research at Krungsri Securities Co. in Bangkok, said by phone. “Weak export data may prompt more downward revisions in Thai GDP growth.”

Siam Cement, the nation’s biggest cement producer, dropped 3.7 percent to its lowest close since Nov. 30. Total Access slid 6.4 percent, the lowest level since April 12. CP All Pcl, the nation’s largest convenience store operator, lost 2.9 percent.

The SET Index is valued at 11.4 times estimated profit for the next 12 months, the lowest level since July 2012, according to data compiled by Bloomberg. That compares with a multiple of 9.8 for the MSCI Emerging Markets Index.

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