The Association of Securities Companies (Asco) expects the Thai stock market to receive a long-term boost if central bank governor MR Pridiyathorn Devakula heads

up the new Cabinet's economic team.

The association has maintained its target for the SET index at the end of this year at 740 points and plans to conduct a new survey of analysts concerning the forecast later this month.

The association's vice chairman, Paiboon Nalinthrangkurn, said the formation of a new government led by Prime Minister Surayud Chulanont would be a blessing to Thai stocks in the long run because the government had a clear policy of achieving sustainable economic growth.

But, because it is not concentrating on "leapfrog economic growth", the stock market will not rise significantly in the short term, he said.

"If the new government can solve the country's economic problems within the next six months, we will see a clearer picture of economic growth and this will pave the way for the following government," he said. "I believe the stock market's price-to-equity ratio and the earnings growth of listed companies will improve."

He added that investors have started to realise that the country's economy will stabilise after a new government is formed.

"The downward trend of domestic interest rates and stable oil prices will also help revitalise the stock market soon," he said.

Pichai Lertsupongkit, executive vice president of Prudent Siam Securities, said he the next government would perform efficiently because ministers will have real competency and ability to make decisions for the sake of the whole country, rather than for any particular interest groups.

"I have high expectations of this government, based on the previous government led by Anand Panyarachun, that it can develop the country's growth in all aspects," he said.

Foreign investors have changed a lot, and now have a certain level of confidence in the new prime minister, but they are waiting for the names of the new Cabinet line-up, Pichai said.

"The stock market has not given a good response to the new government because foreign investors have set aside money to buy into an initial public offering by Industrial and Commercial Bank [in China] worth Bt720 billion," he said. Also, the Thai stock market has been hurt by reports of investigations into politicians' assets.

Prudent Siam Securities said that the SET index would improve early next year in response to clearer political and economic issues, stable oil prices and a slowdown in inflation.

Association of Securities Companies secretary-general Sombat Narawuthichai said the association would conduct a survey of analysts following the appointment of ministers by the new government.

"The stock market will rise considerably in late November to December because several positive factors, including weakening oil prices, easing inflation and a downward trend in interest rates, will stimulate the market," he said.

Meanwhile, the chairman of Ayudhya Fund Management's executive board, Chatrapee Tantixalerm, said foreign investors were not confident in the new government, as seen by the fact that they have been selling Thai shares, country funds in particular.

"Foreign investors' selling pressure will come from investors in country funds. I have talked with several brokers, [and they say] these investors are still concerned about the new government, [because it] did not come from an election. We have to accept that foreign investors are unlike Thais, who understand the situation better. It will take time," he said.

Ayudhya Fund Management predicts the SET Index will end the year at between 700 to 720 points.

 Siriporn Chanjindamanee

 The Nation