The SET Index was on a roller-coaster ride during the morning trading session but soared at the start of the afternoon session on news that the King had signed the Royal Decree submitted by the government.

The market closed at 685.71, off the day's high at 687.88. Turnover was brisk at Bt21.82 billion.

Construction and brokerage stocks were at the centre of the buying spree.

Sino-Thai Engineering and Construction Plc jumped 28.64 per cent to Bt5.30, Italian-Thai Development Plc rocketed almost 20 per cent to Bt5.20, Nawarat Pattanakarn Plc surged 18.52 per cent to Bt0.64, and Ch Karnchang Plc was up 14.81 per cent to Bt7.75.

Kim Eng Securities Plc rose 10.44 per cent to Bt20.10, Asia Plus Securities Plc chalked up 15.65 per cent to Bt3.40, Bualuang Securities Plc soared 12.87 per cent to Bt11.40, and Seamico Securities Plc gained 11.11 per cent at Bt3.20.

The subsiding political tensions also helped the baht to strengthen. The dollar closed at Bt37.925, down from Bt38.055 at the Asian close on Thursday, after hovering between Bt37.91 and Bt38.07 during the day.

Analysts expressed mixed views on the political situation from this point on.

Kongkiat Opaswongkarn of Asia Plus Securities said the monarch's approval of the date had defused the political turmoil.

The endorsement will come as a boon to the local stock market because the country will pull out of the lingering political vacuum, he said, adding that investors should pile up stocks now, even though prices have already surged, because they are still cheap.

In the second half of next year, the economy will start revving up because the next government will draw up economic policies and push through the 2007 fiscal budget by then, said Kongkiat.

"The next government will feel tired because the economy has been left abandoned since early 2006 and it needs time to recover. The new government will start working early next year," he said.

The financial analyst ruled out any dissolution of big political parties because that would create chaos and interfere with the planned October 15 general election.

SCB Securities' head of strategic investment, Adipong Puttarawigrom, said firming up the election date would uncork the project pipeline, as what had been stalled before would now be resumed.

"The clearer picture of politics will give a blessing to the Thai stock market and it will be easy for the SET Index to break through the 700 barrier. When we have the next government, everything will move ahead and this will help restore investor confidence," he said.

The likelihood that big parties, which are on trial, will escape dissolution is relatively high, he said.

However, investors will have to keep an eye on whether Prime Minister Thaksin Shinawatra will run in the upcoming election, he added.

Therdsak Taveeteeratham, a first vice president of Asia Plus Securities, was more cautious, saying the euphoria would be short-lived as court cases accusing the Election Commission, ruling party and main opposition party of fraud in the April election, which was annulled, might influence the political outcome.

He said fixing the date for balloting would somewhat calm investors' nerves because at least the election was now definitely on.

"There seems to be a clearer picture for the political situation. In fact, the stock market was responding positively yesterday to Chat Thai Party leader Banharn Silapa-archa saying he will meet caretaker Prime Minister Thaksin," said Padermpob Songkroh, deputy managing director of Bualuang Securities.

The bourse will move in positive territory over the next few months, thanks to the relaxation of political stress to a certain degree and settled interest rates, he said.

A trader said investors jumped on the buying bandwagon as they anticipated that brokers would benefit from rising trading volume, while the next government would accelerate mega-infrastructure projects and this would boost constructors' earnings.

Siriporn Chanjindamanee

The Nation