Foreign investors have bought Bt10.58 billion worth of Thai stocks in the last month. The foreign buying spree led the SET composite index to break through the psychological 700-point level again yesterday. They snapped up shares with a net position of Bt2.21 billion yesterday alone.

The SET Index yesterday edged up 1.3 per cent to close at 703.1 points, off the day's apex at 705.5. Turnover was brisk at Bt19.73 billion.

The energy sector was the biggest gainer and its turnover accounted for 32.6 per cent of total trading volume.

Thai Oil increased almost 4 per cent to Bt66.50, Rayong Refinery jumped 1.91 per cent to Bt21.30, PTT rose 1.65 per cent to Bt246 and PTT Exploration and Production (PTTEP) was up 0.84 per cent at Bt120.

Shipping stocks also rallied on a bright short-term outlook for dry-bulk carriers, analysts said. Thoresen Thai Agencies added 3.6 per cent to Bt23 and Precious Shipping sailed 6.4 per cent to Bt37.25 amid optimism about rising freight rates.

KGI Securities (Thailand) vice president Adisak Kammool said the gains could be ascribed to a buying spree in big market-capitalisation stocks, including energy, banks and communications.

"Energy, bank and communication stocks have market capitalisation of 31 per cent, 16 per cent and 9 per cent, respectively. Therefore, when they buy these stocks, the SET Index surges significantly," he said.

Foreign investors have returned to the bourse even as Japan's economy has shown strong signs of recovery and China's economy remains solid, he said.

An analyst at Merchant Partners Securities, who requested anonymity, said foreign investors had jumped on the bandwagon to pile up energy stocks because they expect that oil prices would remain high, while energy stocks remain undervalued.

Maroot Mrigadat, president of PTTEP, said the company had cut its sales-volume target from 2006-2010 mainly because of delays in its oil and gas exploration projects.

The delayed production at the Arthit field will also result in a 6-per-cent drop in its investment budget this year. The revised budget is expected to be about Bt59.64 billion, compared with the Bt63 billion earlier planned.

An analyst at Ayudhya Securities, who requested anonymity, said the brokerage had maintained its SET Index target at 700 points for the year, despite the foreign-investor buying spree.

Whether the SET Index could stay above 700 points depends mainly on political factors.

"We have to watch if there are any surprises such as a court order to dissolve a big party, another US Federal Fund rate hike and the Middle East situation," he said.

In the short-run, the Fed Fund rate would have a bigger impact on the local stock market than politics, the source said.

If the Fed nudges up the overnight Fed Fund rate by 25 basis points to 5.5 per cent and it sends clear sign that it will pause rate hikes, the Thai stock market would react positively, he said.

Siriporn Chanjindamanee

The Nation