I was startled to see this…
(chart from stockcharts.com)
I thought the above signified a data error. I checked and found out that this has been accurate…Thailand’s SET suffered from a massive intraday CRASH! The SET collapsed by as much as a shocking 9.2% (!!!) before a late day recovery. The SET closed the session down by still a whopping 2.41% decline!
Yesterday’s loss compounds on last week’s 5.18% slump!
From the Bloomberg:
Thailand’s benchmark stock index fell the most in 11 months as energy companies slumped on a rout in crude and investors speculated this year’s rally was excessive relative to earnings prospects.The SET Index (SET) dropped 2.4 percent to 1,478.49 at the close, taking a five-day decline to 7.5 percent. The gauge briefly tumbled as much as 9.2 percent in afternoon trading before recovering most of its losses. PTT Exploration & Production Pcl (PTTEP) retreated for a seventh day, while its parent PTT Pcl (PTT), Thailand’s biggest energy company, tumbled 4.9 percent. The two stocks represent about 10 percent of the SET Index by weighting.“Thai stocks have been hit by foreign selling as investors pull out from emerging markets,” said Mixo Das, an Asia ex-Japan equity strategist at Nomura Holdings Inc. in Singapore. “A large listed oil-and-gas sector and expensive valuations relative to history are adding more pressure.”
The report rationalizes that “this year’s rally was excessive relative to earnings prospects”.
Well as I have been saying, stocks are driven by liquidity, credit and confidence. The latter of which is a product of the the former two.
Two weeks back I wrote,
To sum it up, since 2008, stocks have NOWHERE been about G-R-O-W-T-H, but about LIQUIDITY and CREDIT from which CONFIDENCE or MOMENTUM has been a product of. Expand liquidity and or credit, then financial assets (stocks, real estate, bonds etc…) booms, regardless of the direction of the economy.Hounded by negative real rates via zero bound (financial repression), the public response to such policies have been to chase on yields even when they have been pillared from gross misperceptions.Yet take away credit and liquidity, the illusion of CONFIDENCE and MOMENTUM evaporates.The same factors can be seen in Thailand whose economy has been walking a tightrope between stagnation and recession but whose stocks, via the SET, like the Philippines (whose chart also has been replica of the Phisix) have been approaching milestone highs. The SET has been up 23% y-t-d as of Friday.
Take away credit and liquidity, the illusion of CONFIDENCE and MOMENTUM evaporates: "This year's rally was excessive"
Clues had already been present, Thailand’s banking loan growth was reported to have registered a huge decline in 3Q 2014—a sign of diminishing liquidity. I wrote:
Despite the marked slowdown in the Thai economy, and the reported recent slowdown in bank lending, it is still surprising to see lofty levels in credit expansion in the private sector in 1H of 2014 (left), but money supply seems to have plateaued for the year
Again, the SET episode simply demonstrates that global and regional deflationary pressures have returned big time!
Oh by the way, I earlier posted that the Indonesian rupiah have reached at ALL time lows.
I guess the pressures on the currency has spilled over to her stock markets as the JKSE at presently trades down by sizeable 1.8+%. The JKSE as I posted last week has a minor head and shoulder formation: a break of around 4900 would extrapolate to a considerable downside if the chart's portent should be validated.
No comments:
Post a Comment