Stock Exchange of thailand chairman Vijit Supinit, second left, rings a bell to mark the debut of DSG International (Thailand) stock. The company’s executives were also at the launch.

"We suspect some foreign net buying during the past weeks may have been encouraged by the belief that there is a good chance of a repeat of limited rallies experienced in the wake of previous elections," the brokerage said in a note released yesterday.

The possibility of the trend continuing is strengthened by the fact that interest rates in the United States and Thailand have already peaked, and that investor confidence and economic activity usually picks up in the last quarter, Phatra said.

The US Federal Reserve overnight decided to keep its key fed funds rate unchanged at 5.25 per cent, but said the pause might be temporary, depending on future inflation data.

The Bank of Thailand's Monetary Policy Committee in its July 19 meeting also left the 14-day repurchase rate unchanged, at 5 per cent.

"Future economic strength would be regarded as favourable, whereas signs of economic weakness could result in interest-rate cuts," the brokerage said.

"With the main rice harvest under way, increased construction activity after the end of the rainy season, the main tourist season in full swing and the usual surge in exports at the end of the year, there is usually a noticeable rise in local investor sentiment.

"Analysts have also noted that Thailand experiences a year-end stock market rally more often than not."

Based on seven general elections and one change in government over the past 20 years, investors could see gains of 10-30 per cent if they buy about three or four months in advance of the election date and wait to sell in the following six months, Phatra said.

The main Stock Exchange of Thailand Index has surged almost 10 per cent since the year's trough at 646.78 at the market close on June 20. Foreign investors have snapped up Thai shares with a net worth of Bt15.32 billion since the beginning of July.

Meanwhile, DSG International (Thailand) Plc - a maker of disposable diapers - on its first day of trade yesterday fell 4.37 per cent below the initial public offering price of Bt3.20 per share to finish at Bt3.06.

The disappointing debut was blamed on poor market sentiment. Dealers said the market was quite bearish, causing DSG's share price to end below the offer price despite a 30-per-cent discount from the company's price-to-equity ratio.