Also, there were market rumours that the Crown Property Bureau, which manages the assets of the Royal Family, may buy a stake in Shin to help cut the foreign holding after it was bought by Singapore's Temasek Holdings. The rumours have yet to be confirmed.

The euphoria was not limited to shares of Shin and its group. Other big market-capitalisation companies led by banking stocks also enjoyed an upswing, and the Stock Exchange of Thailand (SET) Index again broke through the 700 barrier.

Shin jumped 20.35 per cent to Bt34 - a level unseen since May. Shin Satellite Plc chalked up 21.83 per cent to Bt8.65, Advanced Info Service Plc (AIS) rose 8.19 per cent to Bt92.50, iTV Plc soared 13.42 pr cent to Bt3.04 and CS Loxinfo Plc was up 4.42 per cent to Bt3.78.

Shin and other stocks in the group plunged sharply after ousted prime minister Thaksin Shinawatra's family sold more than 40 per cent in Shin to two units under Temasek Holdings at Bt49.25 a share in January.

Siam Commercial Bank, a shareholder in Cedar Holdings - a Temasek Holdings unit that bought Shin shares - rose 3.31 per cent yesterday to Bt62.50. Bangkok Bank was up 1.8 per cent to Bt113, Kasikornbank increased 1.47 per cent to Bt69 and SCC rose 1.63 per cent to Bt250.

The SET Index surged shortly after the bell rang and headed farther north to the day's peak of 710.51 points before closing at 709.67, a 1.7-per-cent gain. Turnover was moderate at Bt18.02 billion.

MCOT Plc, BEC World Plc and the Major Cineplex Group Plc, however, bucked the trend, with their plan to ban alcohol advertisements from local television, magazines and other forms of media under a proposed law aimed at curbing underage drinking.

Bualuang Securities vice president Pongrat Ratanatavanananda said the strong gain was propelled by news that Temasek Holdings would reduce its stake to below 49 per cent.

She said a meeting between Prime Minister General Surayud Chulanont and a group of diplomats also gave a big boost to the Thai stock market, because analysts said foreign investors would have a better insight into Thai political issues.

"The increase in Shin Corp and Advanced Info stock contributed about 5.4 points to the Thai bourse," Pongrat calculated. However, she warned that profit-taking in Shin and its group's stocks might be seen today, after yesterday's sharp gains.

"Foreign investors snapped up banking and other big market-cap stocks, including Advanced Info Service and other stocks under Shin Corp," said Siam Prudent Securities' executive vice president Pichai Lertsupongkit.

He said the strong gain in shares of Shin and its group could be attributed to hopes that Shin's problems would be resolved as doubts about whether its shareholders were Thai resolved.

Syrus Securities head of research Chitra Amorntham said reports that Temasek Holdings would sell Shin shares to bring it below the 49-per-cent limit boosted sentiment.

However, she warned that the euphoria would be short-lived. Her house continues to recommend not buying up Shin and AIS shares.

"We recommend buying only Shin Satellite, because its current price is far below the book value of Bt11.50 and its fair-value estimate of Bt20. We forecast that Shin Satellite's third-quarter earnings will stay in the red but recover next year after it signs deals with Chinese and Indian customers," she said.

Oranan Paweewun

The Nation