The Stock Exchange of Thailand brought the curtain down on 2006 at 679.84 with a Bt9.22 billion turnover, declining 4.99 per cent from the end of last year when the market closed at 713.73.

In the past year, the SET index reached its peak at 785.38 on May 9 and hit its lowest point at 622.14 on December 19. January 23 marked the highest turnover of Bt94.06 billion while the lowest turnover was recorded at Bt4.57 billion on June 26.

The average daily trading volume for this year was around Bt16.33 billion, compared to Bt16.45 billion last year.

Although foreign investors recorded a net sell of Bt30 billion on Black Tuesday, foreign investor transactions for the whole year (January 3-December 28) recorded a net buy at Bt83.77 billion. Institutional investors booked a net sell of Bt12.43 billion while retail investors' net sell was Bt71.34 billion.

Due to the Bank of Thailand's 30 per-cent reserve requirement measure and simmering political uncertainty, brokerage firms forecast that foreign investors are likely to continue to be net sellers and suggested that local investors slow down their stock investments by holding cash.

Capital Nomura Securities (CNS) revised its long-term index forecast from positive to neutral. The firm earlier predicted that foreign investors would be the most important liquidity-driven factor towards the upside of

the index next year with a price to earnings ratio (P/E) of 12 times from the

current 8 times. However, the company revised its forecast after it reviewed

foreign investors' attitude towards the Thai market. The Japan-based CNS concluded that foreign investors would possibly shift their investment to other markets. The firm also changed its weighting for the Thai market to bearish.

In its analytical report, the firm

noted that foreign investors remain in doubt about the capital-control measure after the draconian move aggressively affected the stock market on December 19. The report cited that foreign investors are concerned whether or not the Central Bank may launch additional measures in future if the baht continues to appreciate against the dollar.

"CNS revised the one-month prediction towards the index of the SET from 760-780 to 700-715. It predicted that at the end of 2007, the index would close around 887, down from 944," the report said.

Ayudhya Securities said the stock market remained volatile. It was worried the BOT may announce more measures to prevent baht speculation. The brokerage firm expected that from now for the next three months, foreign investors will continue to sell on the stock market.

Although the Thailand Development Research Institute forecast that gross domestic consumption will grow 4.9 per cent, this would benefit the stock market only in the long term. Therefore, the firm suggested investors lower their investment to 40 per cent.

According to a DBS Vicker Securities' report, foreign investors still have a negative view of the BOT measure. They are also concerned about the foreign business and nominee laws.

Moreover, the report said the political situation in Thailand is starting to look uncertain and increasingly becoming negative. If there's no good news to boost the market, the SET index is expected to continuously decline. The firm said it's possible the index would dive to 570-550.

Siriporn Chanjindamanee

The Nation