New govt 'will bring relief for industry'
A number of industries are expected to benefit from easing political tensions now that a date has been set for the general election.
Implementation of mega-infrastructure projects under the new government will benefit construction firms, Siam City Securities said in a note yesterday. The government recently decided to peel off three electric-train routes, worth an estimated Bt154 billion, from its mega-infrastructure plan, claiming the move would help it complete them earlier. Italian-Thai Development Plc (ITD), Sino-Thai Engineering Plc (STEC) and Ch Karnchang Plc (CK) have good chances of winning mega-project bids, the firm said. The building and raw-material sector would also see increased demand after the next government is established, the brokerage said, thanks to both government and private-sector construction. "We expect cement and steel to be the raw materials most in demand," the broker said. The securities firm also predicted that foreign direct investment would turn around in the second half this year after a dismal first half, when the value of projects the Board of Investment extended privileges to dropped 53 per cent year on year. The steep decline prompted the BoI to cut its 2006 foreign direct investment target to Bt400 billion from Bt700 billion. A clearer political situation would revitalise the stock market , and the average daily trading volume on the bourse in the third quarter should be above the Bt15.5 billion logged in second quarter, the broker said. Even though only slightly affeted by the political turmoil, the tourism and leisure sector should be another winner from the formation of the new government. "The new government can help the industry by injecting money for promotions," the broker said. Seamico Securities echoed Siam City Securities' view, saying that a better political outlook would have psychological impact on construction stocks. "We expect that the bids [on the rail lines] will commence early next year at the earliest," the broker said. But, contractors remain at risk in the short run from spiking oil prices. Their profit margins on government projects might narrow from the current 3-4 per cent, the broker said. Seamico recommended buying Ch Karnchang and ITD stock, but selling holdings of Sino-Thai Engineering and Construction. DBS Vickers Securities (Thailand) suggested long-term investors pile up on contractors' stocks on expectaions that the mega-projects will be started soon.
Siriporn Chanjindamanee The Nation
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