Tuesday, August 14, 2007

Foreigners head for exit in face of sub-prime woes


Thai stocks fell 1.37% yesterday on continued worries about the US sub-prime housing market.

The Stock Exchange of Thailand index closed at 739.82 points, down 11.02, in moderate trade worth 15.69 billion baht.

Foreign investors were net sellers of 3.98 billion baht in securities, their 11th consecutive day of net sales, while local institutions were net buyers of 1.16 billion baht and retail investors net buyers of 2.83 billion.

Viriya Labpromratana, a research manager at Kiatnakin Securities, said the US sub-prime loan story remained a negative factor for markets around the world.

''At current levels, some markets have improved, but Thailand and Indonesia, as well as many others, remain down,'' she said.

Worries about rising default rates in US mortgages have created a credit crunch and sharp losses for institutional investors heavily exposed to securitised housing assets.

The Thai Securities and Exchange Commission yesterday insisted that local brokers and asset-management companies had no exposure to US sub-prime assets or collateralised debt obligations.

Four banks _ BankThai, Bangkok Bank, Bank of Ayudhya and Krung Thai _ have investments in CDOs, but representing only a minuscule portion of their portfolios, regulators said.

Finance Minister Chalongphob Sussangkarn said he did not expect the sub-prime problems to affect domestic financial institutions or market liquidity.

Listed companies, meanwhile, continued to post quarterly earnings in line with market expectations.

Several blue-chip firms, including Thai Oil and Banpu, offered stronger-than-expected performance although telecoms mostly disappointed with poor results from Advanced Info Service and TT&T.

''Most firms with businesses related with government projects posted revenues below target due to investment delays,'' Ms Viriya said.

She said the SET would continue to remain volatile over the next few days, with the main index likely to move between 780 and 800 points.

Kavee Chukitkasem, an assistant managing director at Kasikorn Securities, agreed that the SET would continue to take cues from international trends.

''The SET index will only rise on new foreign inflows, so the hope is for a new wave of investment once the sub-prime worries ease,'' he said.

''The index support line is now at 770 points. Local investors would also take a wait-and-see approach until after the Aug 19 constitutional referendum.''

Among most active stocks, PTT lost 12 baht to 278, Banpu fell six baht to 274, Kasikornbank dropped three baht to 75, Siam Cement fell two baht to 248 and Thai oil shed one baht to 75.50.

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