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Thailand: Foreign investors profit on asset gain
Foreign investors took profits by selling Thai bonds and equities after gaining around 20% of total return, but foreign purchases are expected early next year given supportive market conditions, says the Stock Exchange of Thailand (SET).
The SET index has gained 12% year-to-date and the baht has gained 8% against the dollar, prompting foreign investors to sell their Thai assets as they have attained a 20% profit, said SET senior executive vice-president Santi Kiranand.
“However, it is expected they will invest again in the Thai capital market, including equities and bonds, early next year because of Thailand’s continued economic recovery and earnings of SET-listed companies remain strong,” said Mr Santi.
He said foreign investors were net sellers of equities of around 2 billion baht year-to-date and 30 billion for short-term bonds.
The total foreign holding of Thai equities was valued at 4.78 trillion baht as of the end of August, according to the SET.
Ariya Tiranaprakit, executive director of the Thai Bond Market Association, said total net sales in Thailand’s bond market were associated with short-term bonds, but foreign investors still hold long-term bonds, with year-to-date net purchases of 160 billion baht.
Foreign investors normally invest 10% in short-term bonds and 90% in long-term bonds. Total foreign bond holding is around 800 billion baht, representing 7% of total outstanding bonds worth 11 trillion baht.
“Foreign investment in Thai bonds is mostly related to long-term government bonds,” said Ms Ariya.
She said the trend for bond yield is expected to increase for the remaining two months due to an upward trend for interest rates.
Voravan Tarapoom, chairwoman of the Federation of Thai Capital Market Organizations (Fetco), said earnings of listed firms are projected to increase in every sector next year. There will be no impairment loss in energy, with the banking sector gaining growth traction from loans offered to infrastructure development projects.
Commerce and retail sectors are expected to improve on the back of higher consumer demand and tourism will continue to be robust due to government promotions, said Mrs Voravan.
“The SET index is expected to record an all-time high next year,” she said.
Despite the US Federal Reserve efforts to reduce its balance sheet, global liquidity remains abundant, thanks to monetary stimulus measures implemented by the European Central Bank and the Bank of Japan, she said.
“Stocks will remain the asset class with the highest return for 2018 and 2019,” said Mrs Voravan.
In related news, investor sentiment for the next three months remains in bullish territory for the second month in a row, reflected by Fetco’s investor confidence index (ICI) for November. The ICI stands at 165.77, up from October’s 162.63, and remains within the bullish range of 161-200.
“Investor confidence continues to be bolstered by Thailand’s economic recovery, especially in the export and tourism sectors, which have experienced continuous growth,” said Mr Santi.
Source: https://www.bangkokpost.com/business/news/1355891/foreign-investors-profit-on-asset-gain