"The expected 12-month time-deposit rate of 4.25 per cent gives a better yield than investing in the stock market. This will motivate investors to switch to money markets, where there is lower risk," he said.

He reckoned that deposits offered 1 per cent and 2 per cent in 2004 and 2005 while dividend yields were 3.08 per cent and 3.61 per cent.

The 2006 dividend yield is based on the broker's estimate that Thai listed companies' aggregate net profit will fall 5.7 per cent to Bt508.9 billion this year from Bt539.8 billion in 2005.

He blamed the expected decline on record high oil prices and interest rate hikes.

Moreover, the US Federal Reserve's interest rate hikes is another negative factor causing investors to shift from the stock market to money markets.

The SET index is likely to touch 560-600 points on anticipation that foreign investors will continue selling their holdings for some time.

Foreign investors have sold shares worth more than Bt50 billion since June 10 and the SET Index has fallen nearly 19 per cent.

However, Adisak sought to soothe market jitters by saying that the trough of the SET Index this year would be at 630 based on fundamentals and that it should bounce back to 715 points this year.

Stock market sentiment is expected to improve in the second half of the year on anticipation that the future of oil prices and interest rates will become clearer and the country's economic outlook next year will improve.

"At present, the SET Index is far below the fundamental level. Thai share prices are quite cheap and investors who have plans to hold stocks for at least 12 months can buy them. Interesting sectors are commerce, printing, electronics and hospitals," he said.

Siriporn Chanjindamanee, The Nation