Thai shares yesterday rallied almost 3 per cent on growing optimism that the country's political uncertainty was on the wane following peaceful demonstrations over the weekend. The robust performance of regional stock markets, triggered by lower expectations that the US Federal Reserve (Fed) would jack up interest rates, also gave the Thai market a big boost.

The Hang Seng Index rose 2.69 per cent to close at an all-time high of 21,585.03 points, while the benchmark Shanghai Composite Index jumped 2.93 per cent to 4253.35. The Straits Times Index also closed at record high of 3623.79 after rising 1.19 per cent. The Tokyo Stock Exchange's benchmark Nikkei-225 Index was up almost 1 per cent at 18,149.52, and the Kospi Index rose almost 2 per cent to 1806.88. The Jakarta Stock Exchange Composite Index gained 0.3 per cent to close at a record 2126.493 but off the intra-day high of 2,137.455.

The Stock Exchange of Thailand (SET) Index rose sharply at the opening bell and headed further north to close at the day's peak at 766.2 points. Yesterday's turnover was moderate at Bt23.16 billion.

Foreign investors were net buyers of Thai shares, to the tune of Bt1.3 billion.

Big market-cap stocks, led by energy stocks, were the big gainers. PTT surged 3.85 per cent to Bt270, Rayong Refinery rose 3.74 per cent to Bt19.40, Thai Oil rose 2.9 per cent to Bt71, Banpu gained 3.1 per cent to reach Bt266, Bangkok Bank jumped 2.63 per cent to Bt117, and Siam Cement was up 2.4 per cent at Bt256.

Capital Nomura Securities head of research Thanomsak Saharatchai said the euphoria in the Thai stock market could be ascribed to the absence of violence at pro-Thaksin protests over the weekend and increasing expectations that the Fed would maintain its interest rate at its next meeting late this month after the US Consumer Price Index rose at a slower pace than expected.

Prime Minister Surayud Chulanont's remark yesterday that the general election might be held earlier than scheduled added to the cheerful mood in the stock market.

The outcome of a referendum on the new constitution and the general election being held on schedule in December are the two major uncertainties still casting a cloud over the market.

SET president Patareeya Benjapholchai said the rally was attributable to higher confidence following the peaceful protests over the weekend.

"Everyone was keeping an eye on the political situation and demonstrations. Absence of violence in the past few days eased and investors' anxiety to a certain extent. Moreover, the government is speeding up to hold the election," she said.

Kasikorn Securities chairman Rapee Sucharitakul estimated that the SET Index would reach 840-880 points over the next 12 months, driven by capital inflow.

Earnings of listed companies are predicted to grow 8.8 per cent next year, compared with 3 per cent this year, he said.

ING Funds (Thailand) managing director Maris Tarab said he was confident the general election would take place either in December or even a bit sooner or later than that.

"Many brokerage firms said the index could rise to 800. I agree. So far, the government has handled the protests very well."

One local broker said the next support level would be 756 points, while the resistance level is 770.

Meanwhile, Patareeya said the SET had lowered its estimate of 60 companies to list on the market this year after only two debuts in the first six months.

However, she declined to reveal the new target.

The SET will on July 2 name 10 companies whose free-float shares are lower than the required level of 15 per cent of paid-up capital, the SET president said.

Finance reporters

The Nation