Foreign funds sold $1.1b of Thai shares

BANGKOK • Foreign investors are selling Thai stocks at the fastest pace this year as the country's military government struggles to deliver on its pledges to revive economic growth.

Overseas funds unloaded a net US$774 million (S$1.1 billion) of Thai shares in July as the benchmark SET Index fell 4.3 per cent.

The baht is trading near its weakest level in more than six years after slumping 3.4 per cent against the US dollar last month. It suggests international money managers are losing patience amid falling exports, weak corporate earnings and a contraction in manufacturing.

Prime Minister Prayut Chan-o-cha has failed to make much headway on planned investments in transport infrastructure, disappointing investors who had bet the projects would help kick-start Southeast Asia's second-largest economy.

"We still don't see any bargains," said Singapore-based money manager Roshan Padamadan at Luminance Global Fund. "A dark cloud is hanging over the horizon."

The finance ministry last week cut its forecasts for exports and economic growth for a third time this year. A factory output index has dipped every month but one since March 2013, while exports have fallen each month this year.

The SET Index dropped 0.4 per cent to 1,434.79 in Bangkok in early trading yesterday, heading for the first decline in three days.

Foreign outflows may abate as traders with short-term strategies may have already sold their holdings, said Bangkok-based chief distribution officer Juckchai Boonyawat at Manulife Asset Management. International investors have sold US$1.24 billion of Thai stocks so far this year, following withdrawals of US$1.09 billion in 2014 and US$6.21 billion in 2013.

"Overseas investors with a long-term strategy are the ones who still hold Thai stocks," Mr Juckchai said. "We expect the government's spending to come into effect from the fourth quarter onwards."

Still, lacklustre earnings in the broader market are deterring investors. "Listed companies' earnings growth has been disappointing as a result of the weak economy," said head of investment Win Phromphaet at the Social Security Office.

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A version of this article appeared in the print edition of The Straits Times on August 04, 2015, with the headline 'Foreign funds sold $1.1b of Thai shares'. Print Edition | Subscribe