External factors, foreign net sells drive down SET Index

The SET Index yesterday plunged as much as 38.93 points or 2.55 per cent on a panic fuelled by deaths from bird flu in China and the tension arising from bellicose declarations by North Korea.

Foreign investors showed net sells of Bt3.9 billion, while securities accounts also recorded net sells, of Bt1.4 billion. But institutional investors showed net buys of Bt1.19 billion as did local investors, of Bt4.11 billion.

The Stock Exchange of Thailand's main index closed at 1,489.53 points with total trade volumes of Bt49.85 billion, while the Market for Alternative Investment closed at 459.11 points, falling by 9.71 points with total trade volumes of Bt2.13 billion.

The plunge was in line with other Asian markets, which mostly fell on concerns over the US economy, but Tokyo enjoyed a second straight rally and the yen slipped after the Bank of Japan unveiled a vast plan to boost the economy.

A day after the Bank of Japan's stimulus aimed at bringing years of deflation to an end, the Nikkei index surged more than 4 per cent in early trade to its highest level since August 2008. However, profit-taking later in the day meant the rally petered in the afternoon, while the yen regained slightly after suffering a big sell-off in the wake of the BOJ announcement.

Mayuree Chowvikran, senior analyst at Maybank Kim Eng Securities (Thailand), said the local stock slump was mainly on net selling by foreign investors on concerns over the deadly bird flu in China as well as the fact that the markets in that country were closed for a holiday.

The sales came after North Korea declared a "state of war" with South Korea and the United States last Saturday as well.

The SET Index next week is expected to come under pressure from external as well as domestic political factors arising from the ongoing moves for constitutional amendment, said the analyst.

Wikij Tirawannarat, first vice president at Bualuang Securities, said the stock market was likely to be fragile, as investors sell massive shares on concern the avian influenza strain in China will spread to other countries.

Meanwhile, the Gold Research Centre said the tense situation in the Korean Peninsula, if it escalated to actual war, would likely drive the gold price higher than US$1,800 per ounce. But in the short term the gold price has dipped, and could drop as low as $1,450 per ounce.

The gold price in Thailand will not be severe affected by this shift in investment thanks to the strong baht, and should move in the range of Bt21,500-Bt23,000 per baht weight, the centre said.

The investment yield on gold in the first quarter dropped 5 per cent and is unlikely to exceed 10 per cent this year.

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Article source: http://www.thethailandlinks.com/2013/04/06/external-factors-foreign-net-sells-drive-down-set-index/