Thai shares yesterday broke through and closed above the 700-point barrier for the first time since the Bank of Thailand announced the 30-per-cent capital reserve requirement on December 18 last year. The rise was due to a buying spree by foreign investors.

However, analysts warned that the euphoria may not be sustained due to the lingering political uncertainty.

The SET Index opened at 700.10 and headed further north to peak at 706.36, before closing at 705.47 - a 0.9-per-cent gain from Tuesday. Turnover was moderate at Bt13.15 billion.

Foreign investors yesterday bought Thai shares with a net worth of Bt519.53 million.

Thoresen Thai Agencies jumped 3.82 per cent to Bt34, PTT was up 1.82 per cent at Bt224, PTT Chemical gained 1.85 per cent to Bt82.50, Aromatics (Thailand) surged 1.82 per cent to Bt56, and Siam Cement rose 1.72 per cent to Bt236.

ACL Securities assistant managing director Thatsamol Wittayaraksan said that low inflation in April had ignited investors' expectations that the Monetary Policy Committee at its meeting on May 23 would cut the one-day repurchase rate further. "The government's stimulus package also gave a boost," she said.

The Commerce Ministry on Tuesday reported that the Consumer Price Index in April had risen slightly by 1.8 per cent, compared with 2 per cent a month earlier.

The next resistance levels for the SET Index are at 710 and 720, while support levels are at 695 and 700, said Thatsamol.

Kiatnakin Securities senior technical analyst Apisak Lipthamrongkul said the euphoria could be ascribed to foreign investors' continuing buying pressure, as Thai shares remain cheaper than other stocks in the region.

An analyst at Finansa Securities said foreign investors had shifted their money from banking stocks to other sectors - energy and petrochemicals - that are expected to announce stunning first-quarter results.

He said foreign investors

had snapped up Thai shares

with a net position of Bt11.7 billion in April and Bt42.3 billion from January to April.

The political uncertainty and the slowing economic picture, which still cast dark clouds over the stock market, will make the euphoria short-lived.

"Thai shares are far cheaper than other stocks in the region in terms of price to earnings ratio, earnings value/earnings before interest, tax, depreciation and amortisation, or dividend yield, so the Thai bourse would be an attractive place for speculation at this time," the analyst said.

Warut Siwasariyanon, Globlex Securities vice president for research, said profit-taking after the current sharp increase would prevent the stock market from going up further.

Siriporn Chanjindamanee

 The Nation