Phatra Securities Plc suggested yesterday that the cynical view of foreign investors on Thai politics after the court ruling on the election commissioners had been a factor in curbing a stock market rally, which has presented a buying opportunity.

"Foreign investors are under a false perception. They believe that the Thai Rak Thai Party is most likely to deliver growth. Once there was confirmation of the October 15 election date, which is perceived to benefit Thaksin [Shinawatra, caretaker prime minister], the stock market rose.

"But two days later, when the commissioners were jailed, which helped cool the political climate, the stock market did not rally as it was seen as anti-Thaksin, or anti-growth," said Ian Gisbourne, Phatra's equity strategist, at a seminar yesterday.

Gisbourne thinks this perception is incorrect as he believes the new government, led by Thai Rak Thai or not, will deliver long-term growth. Thus, this is an opportunity to buy local stocks.

He set a top forecast for the SET this year at 790 assuming favourable global equity markets. If not, the main index would range from 720 to 750.

Gisbourne's top picks for short-term investment, or three months, were Krung Thai Bank, Asian Property Plc, Airports of Thailand Plc, Minor International Plc, Thoreson Thai Agencies Plc, while three-year investment picks are Siam Commercial Bank, Land & Houses Plc, Airports of Thailand Plc and Khon Kaen Sugar Industry.

At the same seminar, Phatra Securities managing director, Supavud Saicheua predicted the Thai Rak Thai Party would gain about 300 parliamentary seats and is likely to form a coalition government to concentrate mainly on revising the Constitution. This would not do much to drive economic growth, although the new government would still invest in some mega-projects.

However, there is unlikely to be much progress on free-trade agreements or privatisation.

With the six-month delay of the 2007 fiscal budget, GDP growth over the next 18 months would likely be no more than 4 per cent. But probably expand in 2008. Phatra has forecast average

earnings growth of listed companies at 3.7 per cent for this year

and 3.4 per cent in 2007.

Supavud advised investors to shift their investment weighting more toward equities and hold them for at least five years on the assumption that political reform will bring more stability.

Proportionately, stocks should make up more than half of an investment portfolio, he said.

In addition, he believes land prices are likely to rise, particularly near resort areas and tourist destinations as well as Bangkok and foreigners may try to cash in. However, this depends on if the government allows foreigners to possess land here.

Meanwhile, the secretary-general of Securities Analysis Association, Sombat Narawut-tichai, said yesterday that a survey showed that the energy sector is expected to grow by 24.9 per cent, the highest growth in six industries.

The survey asked 23 securities companies for their views on the second-quarter earnings prospects of six industries.

He said 33 per cent of the survey respondents believe the energy sector as a whole will show the most growth, with earnings in the petrochemical industry will show a 19.2-per-cent rise. They also believe construction sector earning will drop by 19.72 per cent, while property developer sector will drop 12.41 per cent.

Sombat said that although some industries may record negative earnings due to the economic situation, inflation and interest rates are the main factors that need to stabilise as political uncertainty has now lessened.

Siriporn Chanjindamanee,

Jiwamol Kanoksilp

The Nation