Oct. 15--Thai stocks fell 2.04 percent yesterday in a roller-coaster session led by concerns about His Majesty the King's health.

His Majesty has been in Siriraj Hospital since Sept 19. The Royal Household Bureau has said that His Majesty is making a stable recovery.

Heavy foreign selling helped spark a broad sell-off yesterday. The Stock Exchange of Thailand index closed at 731.47 points, down 15.20, in heavy trade worth 47.57 billion baht. The index fell to a low of 714.39 points before rebounding in the last hour of trade. Energy stocks fell 1.58 percent, banks dropped 2.76 percent and property lost 2.75 percent.

Foreign investors were net sellers of 3.97 billion baht in stocks yesterday, with institutional investors net sellers of 98.32 million and local investors with a net buy position of 4.07 billion baht.

The SET's decline came even as most Asian markets posted gains on optimism over the third-quarter earnings season. Hong Kong shares gained 1.95 percent, Seoul rose 1.24 percent and Shanghai jumped 1.17 percent, although Tokyo fell 0.16 percent amid concerns over the appreciating yen.

Patareeya Benjapolchai, the SET president, said a correction was to be expected considering the sharp gains posted by the market this year.

The SET index has gained more than 21 percent over the past three months and is up nearly 66 percent since January, thanks in part to heavy foreign inflows as international investors seek higher yields in emerging market assets.

Mrs Patareeya said Thai valuations remained attractive from a price-to-earnings and dividend yield perspective.

According to Macquarie Research, the SET curently has a forward 12- month PER of 11.4 times, ranking as the lowest in the region and compared with 17.7 times for India, 14.2 times for Indonesia and the Philippines and 15.4 for Malaysia.

Veerathai Santiprabhob, the SET chief strategy officer, said daily turnover in September averaged 26 billion baht, a 26-month high.

Nine-month dividends by listed companies rose 20 percent year-on-year to 198 billion baht, a figure nearly on par with dividend payments in 2007.

"The figures show that listed companies have adjusted and recovered," Mr Veerathai said.

M.L. Thongmakut Thongyai, head of the Foreign Brokers' Association, said yesterday's declines were driven not only by rumours, but also by profit-taking by foreign investors looking to lock in the gains made earlier this year.

Among blue-chips, the coal producer Banpu fell 10 baht to 446, PTT lost 6 baht to 267.00 and PTT Exploration and Production edged down 0.50 baht to 155.

In the currency market, dealers said the rumours spurred an afternoon sell-off in the baht, pushing the currency to 33.38/41 to the US dollar compared with 33.26/31 on Tuesday.

One dealer at CIMB Thai Bank said the baht would move for the rest of the week in line with local stocks, although the medium-term trend for dollar weakness remained unchanged.

Local bonds changed little, with the yield curve fluctuating by only several basis points. Nattapol Chavalitcheevin, president of the Thai Bond Market Association, said volume was normal yesterday at 60 billion baht. Non-residents were net sellers of about 3.5 billion.

In London, the cost for insuring Thai debt rose, with 5-year credit default swaps up five basis points to 89.8, according to Reuters. Swaps were priced at 84.9 basis points on Tuesday and 82.8 on Monday.

-----

To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Copyright (c) 2009, Bangkok Post, Thailand

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

PTT,

A service of YellowBrix, Inc.