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The SET took a 1.79% nosedive to close at 1352.13 on Monday on concerns about China’s corporate profits. The China National Bureau of Statistics (NBS) said on Monday that the profits of industrial companies dropped 8.8% in August from a year earlier, the biggest one year fall since beginning monitoring the data in 2011. Actually, I have never heard of this particular NBS data before.
Other relevant news might be from Siam Commercial Bank (SCB) saying that Thailand's export value is expected to contract by more than 4% in 2015. Nonetheless, what SCB was saying is a repeat of what the Bank of Thailand (BoT) said on Friday that Thailand exports are expected to shrink 5%, instead of a 1.5% decline, citing economic slumps in China and Thailand's other trading partners. So, there is nothing new.
The foreign investors were selling everything from stocks and bonds to the Thai baht. Proprietary trading, or “prop trading”, by the investment banks was very active on Monday with net sells of 1.86 billion baht, but with big red flags as it could be not just profit taking this time. Two weeks ago on September 11, prop trading was also very active with net sells of 1.2 billion baht but no red flags were raised that time, as it could have just been profit taking.
Technically, we have a symmetrical triangle breakdown and a confirmation of the bearish engulfing pattern. Apparently, traders were successful this time to take the market down as they have been trying before. On September 11, the first bearish engulfing pattern, which consists of one white candlestick followed by a second black larger candlestick, had emerged but was not confirmed. The SET is still moving in a symmetrical triangle chart pattern but downside risk has significantly increased.
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