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Listed firms’ profits increase only 2.4%

Listed companies reported total net profits for the first nine months of 2011 of 511.9 billion baht, an increase of 2.4% from 500 billion in the same period last year, according to Tientip Subhanij, director of the SET’s Capital Market Research Institute.

Sales revenue in the period rose 30% year-on-year to 6 trillion baht for companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment. Third-quarter sales were 2.19 trillion baht.

Dr Tientip cautioned that the figures were not complete as 74 companies had not yet reported their third-quarter results because they were affected by flooding. The SET has given them an extension beyond the Nov 15 deadline.

“Even though the figures exclude flood-affected firms, they will not change significantly because they are just a small part of the total while most of the heavyweights have reported already,” she said.

She agreed with the market view that the floods would definitely take a toll on earnings in the fourth quarter. However, she still hopes to see only slight impact on the market overall.

“So far, we have seen only 30 firms out of almost a thousand that have been critically damaged by the floods,” she said.

While Thailand’s fundamentals will be seriously affected by the floods, foreign investors in the market are concerned less by domestic factors than global events, especially in Europe.

Foreign fund flows into emerging markets including Thailand have been picking up since October because sentiment has gradually improved since Greece and Italy appointed new leaders.

Also the market expects that the US government sooner or later will need to print more money under a third quantitative easing (QE3) programme to stimulate its sluggish economy during the next year.

Foreign investors were net buyers of 30.84 billion baht worth of Thai shares in October after two months of net selling. Buying is expected to continue for the rest of the year as emerging markets are perceived as offering higher returns at lower risk compared with the US and EU. EU bonds also offer high yields but they imply high risk.

However, foreign investors remain as net sellers for the first 10 months of 4.79 billion baht.

The SET market capitalisation as of Oct 31 was 7.99 trillion baht, up 6.46% from the previous month. The SET Index ended at 974.75 points, up 6.39% from September.

Daily trading turnover for the SET and MAI in October decreased 2.82% from the previous month to 26.04 billion baht. The 10-month average was 30.98 billion baht, against 29.07 billion in the same period last year.

The Thailand Futures Exchange (TFEX) in October averaged 50,531 contracts per day, down 20.8% from September, trading in SET Index Futures and gold futures decreased in line with global markets. Oil Futures, the newest product that started trading on Oct 17, averaged 263 contracts per day.

The main concern over the remainder of 2011 remains euro zone debt, while local politics has not had much impact on stock trading lately.

“Thailand had made it through a political crisis last year. At the time, investors were panic-selling shares for two months, but during the sub-prime crisis they were selling continuously for seven to eight months,” said Dr Tientip.

Source: Bangkok Post

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