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Equity funds suffered the most with an average loss of 24.56%. The next lowest were mixed-asset funds, down an average 16.29% following the abrupt decline in the stock markets.
Among equity funds, portfolios that invest in emerging markets in Asia and Europe, natural resources, and energy suffered the most after the strong sell-offs in those equity markets.
The worst performing equity fund in Thailand in October was SCB Platinum Global Open End, losing 40.77% in the month. The next was PrimaVest-AllianzGI BRIC Stars, down 39.66% in October and down a full 68.69% year-to-date after equity markets in China, India, and Russia have dropped more than 50% since the end of last year.
The best performing equity funds in October were UOB Smart Financials Opportunities, MFC Global Smart, and SCI Global Health Care with losses of 6.14%, 12.32%, and 12.87%, respectively.
On the local front, the Thai stock market suffered in October its biggest monthly setback since 2000. The severe market fallout was caused by violent politically motivated demonstrations that left two demonstrators dead on October 7 and global market capitulation during the soaring global financial troubles.
The extreme sell-off led the Thai bourse to activate an automatic circuit breaker after 10% declines two times within the month. On October 10 the local bourse headed down, following the collapse of foreign bourses from heightened global recession concerns from the US subprime mortgage crisis. On October 27 the Thai SET index was hit badly from regional market fallout as the US and European financial rescue plans couldnÆt restore investor confidence.
The Thai SET index touched the lowest point at 383.63 on October 28 but managed to rebound and closed at 416.53 û down 30.18% for October û after several central banks cut policy rates aggressively to keep their economies alive: the US cut 50 basis points to 1.00%, Hong Kong cut 50 basis points, China cut 27 basis points, and Taiwan cut 25 basis points.
ôMarkets remain clouded with risk and volatility. Especially now, all market participants are keeping an eye on the new economic policy measures of the new US government to be administered by Barack Obama,ö says Suthee Luangaramkul, Thailand research manager at Thomson Reuters Lipper. ôIt remains to be seen if the new economic policy can stimulate the US economy effectively to bring it out of the unwanted recession. Recent US economic indicators show the US economy continues to worsen as the unemployment rate shot up and performance of US corporations slowed dramatically.ö
The only good news for the market was the decrease of crude oil prices, Luangaramkul says, but it was not a good-enough catalyst to keep the market buoyant.
ôAs long as the high level of uncertainty prevails in the market, investors should invest with caution,ö Luangaramkul says. ôAn appropriate strategy may be a conservative investing style focusing on fixed income funds that invest in safe assets such as domestic government securities. However, the dollar-cost-averaging strategy may be a viable option for long-term investors because the prices of many securities are now trading at a deep discount. When the uncertainty cloud disappears, these securitiesÆ prices should return to their intrinsic values, but bear in mind that the transition process will take time.ö
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.