Discouragement and despair by Dr. Niwes Hemvachiravarakorn

 

"Thai stocks" fell because foreign investors "sold a lot" of stocks in the market, and it has been selling continuously since the beginning of the year until today, reaching nearly "100 billion baht" in less than 6 months.

 

The reason for the big picture may be that the stock market index from the beginning of the year fell to 1,306 points on June 14, 2024, or about 7.8%, which is one of the most falling stock markets in the world after last year when the market index was also the "worst in the world"

 

Looking at the short-term technical reason, Thai stocks fell because foreign investors "sold a lot" of stocks in the market, and the continuous sales from the beginning of the year until today have reached nearly 100 billion baht in less than 6 months , which is a very high net sale compared to the past 10 years when foreign investors sold an average of about 100 billion baht per year

 

But net selling by itself does not necessarily mean that the stock must go down. For example, most Asian stocks during this period were also net sold. In fact, the Vietnamese stock market has been very heavily sold by foreign investors, but the stock index has risen by about 13% since the beginning of the year, or the Hang Seng Index of the Hong Kong market itself has risen by about 6% despite the problem falling by about 10% at the beginning of the year

 

The Thai stock market index fell by about 7-8% in about 6 months. If you look at the past statistics, it may be said that it is not very severe, and most of the time there are not many people who "take heart" and become "discouraged" or "hopeless" with the stock market.  The main reason is that most retail investors are "traders" or short-term stock traders who can make profits in the stock market even when stocks fall.

 

 

In other words, during a stock fall, there is usually a time when the stock will bounce or rebound, so they can always buy stocks during a stock fall and sell when the stock is up to make a profit. But during this period, It seems that the period when stocks will rise is very short, maybe only 2-3 hours in the morning. It makes you discouraged to play

 

As for long-term investors, "line VI" , which is usually a large investor and focuses on investing based on the fundamentals of the business. In the past, although the stock market as a whole may not have been very good, there have always been companies or stocks with good performance or good developments or stories that make investors flock to play. As a result, the stock price has risen far above the index. Profit for large investors While many retail investors who participate in "speculation" can make profits "every day".

 

But during this time, It seems that stocks that used to be running busily and prices are rising. Some of them are like rocket addicts because the company has a good story. The stock has grown remarkably for several quarters or years, causing the stock to have a high market cap that exceeds the fundamentals because the stock has been "cornered" and continues to fall like a "broken corner".

 

The hope of investors who focus on fundamental stocks in the near future is almost the only hope left, that is, the performance of the company or the stock they are investing in will be good enough to drive the stock price back to a new uptrend. Their belief is that those stocks are good stocks and still have a chance to grow again when economic conditions improve according to global economic conditions, or the company gets better and can eat more market share from competitors

 

 

The results that have come out since the beginning of the year for many companies are called almost "catastrophic", some companies may have debt problems in the form of debentures that may not be able to be paid. Therefore, the stock collapsed after a long period of gradual decline.

 

Many more. Companies that were once considered to be "super stocks" . Results It was not a disaster but "disappointing" because investors had high hopes that at least profits would grow "double digits" and not decrease, but the result was a significant decline in growth and it has been declining continuously for several quarters, as well as the stock price has gradually declined accordingly. Stocks have had a "broken corner" before. The company still has good profits. However, it will not grow slowly or not grow, so it will not be possible to stop the decline of stocks.

 

Some of the large-cap stocks that are the target of foreign investors' selling of stocks The company announced good earnings and very impressive growth, which helped those who invested in it have hope that the stock price that had been stagnant all along. Because that was the only hope left, but the fact turned out that the stock price fell sharply. The belief that the company's performance is the "father of all institutions" in the stock industry, that is, if the performance is very good, the stock must run strongly

 

And if the performance is not able to make the stock go up. How do stocks go? And all of this is the discouragement and despair in the Thai stock market during this period, which is manifested in the decreasing daily trading volume of stocks, and I believe that it has decreased in all groups, from daily stock players to large stocks and VIs.

 

The important point is how "temporary" the current situation is. Is this the "4 a.m." time as people say in the stock industry? That is, it is the "darkest" time , but it is "almost the time of light" . "Expert" stock players must come in and buy stocks first in order to make beautiful profits when the new day of "bright sky" comes, will the stock rise as huge as "no one expected" ?

 

 

However, I personally believe that the problem of Thai stocks may not be a temporary problem, but a permanent problem caused by a structure that is difficult to solve. Those structures Originally, it was very favorable for the Thai economy and the stock market, but over time when the environment changes slowly but surely, while we are not aware of it and do not restructure as it should, as a result, we are in a condition that is not conducive to the continued growth of the economy, which results in the stock market being difficult to grow, and it will be like that for a long time and will never return to the original state

 

The first structure that is having an increasingly severe and obvious effect is that of a rapidly aging population. As a result, the number of workers generating productivity or GDP will decline and will continue to decline, as well as efficiency will decline because workers are aging and not technologically literate.

 

The second structure is the matter of the country's governance system, which will be an important engine in implementing and modifying the rules and guidelines of administration, especially the country's economy and politics, in line with the times. In my opinion, the existing structure is probably quite outdated and cannot be adjusted quickly enough. In particular, our system is not sufficiently responsive to the true free will of the people, and the government is not stable enough to comply with that will.

 

 

The third structure is the structure of the company, which is the main player in the economy, which consists of old or modern industries that are saturated. Major companies on the stock exchange have not created businesses using modern technology to create new scurbs or growth, or have tried but have not succeeded. Currently, Thailand is leading in new industries.

 

The conclusion is that the structure that is the pillar of our economic growth and the stock market is It started to deteriorate rapidly, maybe about 10-15 years ago. The coup d'état 10 years ago almost brought the development or improvement of structures, especially political, to a complete halt. What is even more worrying is that the decline has not stopped and may get worse, especially in terms of the population, where the attitude of Thai people has changed a lot in terms of not wanting to have children, which may result in a decrease in the drive to build a future and end up in a lack of dreams and hopes to build oneself or wealth, and that is the end of real economic growth.

 

And although the long-term economic outlook is not good at all. However, Thai stock prices are still not cheap enough in the Chinese stock market, so the reasons for buying Thai stocks are likely to be very small. And that is why they have always sold Thai stocks and will continue to sell.