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Thailand's SET Index jumped 11 percent
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maxsyn
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20-Dec-2006 20:20
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Emerging-Market Stocks Gain; Thailand Rescinds Capital Control By Darren Boey and Mahmoud Kassem Dec. 20 (Bloomberg) -- Emerging-market stocks rallied from the biggest drop in three months after Thailand exempted stocks from capital controls imposed on international investors. Thailand's SET Index jumped 11 percent in Bangkok after plunging 15 percent yesterday, its biggest slide in 16 years, following the introduction of the new rules. Benchmarks in South Korea, Indonesia, Malaysia, Pakistan, Russia, Hungary and South Africa were all up more than 1 percent. The Morgan Stanley Capital International Emerging Markets Index, which tracks 25 markets, added 1.2 percent to 891.70 at 11:16 a.m. in London. The measure yesterday dropped 1.6 percent, the most since Sept. 11, after Thailand's rule change highlighted the risks of investing in developing nations. ``These countries are going to think twice'' given yesterday's market reaction, said Mark Mobius, who oversees $30 billion in emerging-market stocks at Templeton Asset Management Ltd. Thailand's latest move ``is positive. It does indicate they are flexible and they are willing to admit errors and change.'' PTT Pcl, Thailand's largest energy company, had its biggest one-day gain ever. Cnooc Ltd. in China and Russia's OAO Lukoil led oil producers higher after crude advanced in New York. The MSCI emerging markets index has more than regained its losses after sliding 25 percent during May and June on concern rising global interest rates would hurt demand for raw materials. The emerging-markets measure has gained 25 percent this year, more than an 18 percent gain by the MSCI World Index, a benchmark for equities worldwide. September Coup Thailand's SET, which fell as much as 19.5 percent yesterday, today recouped almost two-thirds of the loss. The measure posted its biggest gain since February 1998. The country's reputation with investors has suffered long- term damage following a Sept. 19 coup and this week's on-again- off-again capital controls, which wiped out $23 billion in market value from the Thai stock market yesterday. Thai Central Bank Governor Tarisa Watanagase told reporters two days ago that investors based abroad would be able to invest just 70 percent of funds transferred to Thailand, and only recoup all of their funds if they kept the money in the country for more than a year. The rule said any withdrawals within a year would be penalized 10 percent of the original investment. Thailand was the country that touched off an emerging-market slump in 1997-98 by devaluing its currency, the baht. `Unpopular Decisions' ``It's positive for emerging markets because it shows governments in this asset class are now quick to change unpopular decisions,'' said Matthias Siller, who helps oversee $6 billion in global emerging markets at Baring Investment service in London. ``That wouldn't have been the case 10 years ago.'' PTT, Thailand's largest company by market value, gained 16 percent, bouncing from yesterday's 17 percent slide. Bangkok Bank Pcl, the country's biggest lender, climbed 7.8 percent after plunging 16 percent. Following the drop in Thai stocks, the country's government agreed to exempt equities from the controls. Central banks in Malaysia, the Philippines and Indonesia said yesterday they wouldn't implement capital restrictions to control their currencies. ``Yesterday was a valuable lesson in telling the emerging markets what not to do,'' said Raymond Tang, who manages $1.7 billion as chief investment officer of CIMB-Principal Asset Management Bhd. in Kuala Lumpur. Other markets won't follow ``unless they want to send the economy back 10 years.'' Indonesia, Malaysia Indonesia's Jakarta Composite Index gained 1.7 percent, recouping some of yesterday's 2.9 percent slide, which was the measure's biggest drop since June 13. PT Bank Mandiri, the nation's largest lender, climbed 2.7 percent, after having slumped 3.5 percent yesterday. Malaysia's Kuala Lumpur Composite Index added 1.5 percent, following a 2 percent drop yesterday, while the Karachi Stock Exchange 100 Index added 1.3 percent in Pakistan, rebounding from yesterday's 2.8 percent slump. South Korea's Kospi index closed 1 percent higher today. The declines yesterday ``definitely'' provided an opportunity to buy stocks at a discount, said Templeton's Mobius, who hasn't added any shares yet. Still, ``our guys are out there looking for opportunities constantly.'' Asian stocks and currencies gained this year as growth in the region's emerging markets drew funds from overseas investors. Funds investing in shares of developing countries attracted $1.65 billion more than they lost from redemptions in the week ended Dec. 13, figures from Emerging Portfolio Fund Research showed. The net fund inflow was the most since the weekly period ended May 10, when they drew $2.86 billion. Overseas Investors Overseas investors yesterday sold 25.1 billion baht ($699 million) more of Thai stocks than they bought after the central bank introduced the baht lockup requirements, the largest sell- off since at least Jan. 4, 1999, according to data compiled by Bloomberg. Outside Asia, Hungary's BUX Index jumped 1.1 percent, after slipping 2.3 percent yesterday. South Africa's FTSE/JSE Africa All Share Index gained 1.2 percent to a record. Russia's RTS Index advanced 1.3 percent. Net capital inflow into Russia may exceed $30 billion this year, Interfax reported, citing Deputy Prime Minister Alexander Zhukov. Foreign investment grew 12.9 percent in the first 11 months, the news service said. Lukoil, Russia's largest oil refiner, climbed 1.4 percent. Cnooc, China's largest offshore oil producer, added 1.3 percent, while Oil & Gas Development Co., the biggest explorer in Pakistan, gained 1.6 percent. Crude oil rose 1.5 percent to $63.15 a barrel yesterday on the New York Mercantile Exchange amid speculation a U.S. government report today will show the nation's inventories declined for a fourth week. Prices were recently at $63.41. |
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