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Routed Thai stocks likely to rebound

BANGKOK: Routed Thai stocks could stage a technical rebound this week since heavy selling by foreign investors is likely to ease, analysts said.

"The recent sales (of Thai stocks) by foreign investors do not reflect any change in Thailand's economic fundamentals," said Satit Wannasilapin, head of research at Capital Nomura Securities.

"And the index has plunged to such an extent that we believe such selling by foreigners could stop shortly," he said.

On Friday the composite SET index finished up 2.54 points or 0.63 percent at 408.35 in active turnover of 7.31 billion baht. It was down 10.5 percent on the week.

Average volumes for the week fell nearly 10 percent to 6.53 billion baht in the week ending February 18.

So far this year, foreigners have been net sellers of 10.8 billion baht worth of Thai shares, more than triple the 3.13 billion baht sold in all of last year.

In February alone, net selling by foreigners amounted to 7.5 billion baht.

Analysts said foreign investors were trimming their investment portfolio in Thailand in line with market talk that the Morgan Stanley Capital Index was going to reduce its weighting in Thailand.

Investors expected the MSCI to raise its weightings in Malaysia, Taiwan and India and were shifting some money to those countries.

Satit saw a rebound in the Thai market on the back of better prospects for Thai non-finance corporate earnings and some debt restructuring progress.

"We expect performance of listed Thai companies, both finance and non-finance, to improve by as much as 70 percent in 2000 from a year ago," he added.

Phisanu Promchanya, at Yuanta Securities in Bangkok, said however that more downside risk was still there if the SET index plunged below 400 points.

"But I don't think it will because the market already looks quite oversold," he said.

Dealers said the SET index 14-day relative strength index (RSI) stood at 14.637, suggesting a heavily oversold condition.

"We could not be assured when (foreign investors) will be back in the market. But certainly they will. This is just a short-term adjustment," Phisanu said.

Capital Nomura's Satit recommended buying into Thai telecommunication stocks, which fell last week. He believed they would fuel any recovery in the local market in the near-term.-Reuters