SET rises 2% to 41-month high

Thai shares yesterday surged 2.05 per cent to a 41-month high on a continuing buying spree by foreign investors and increasing confidence resulting from signs of an economic recovery.

The SET Index started the day with a gain and headed further north to peak at 793.08, before weakening marginally to close at 792.71. Turnover was moderate at Bt24.19 billion. Foreign investors were net buyers to the tune of Bt2.54 billion.

Big market-cap stocks were the largest gainers, led by banking and energy stocks. PTT rose 2.96 per cent to Bt278, Bank of Ayudhya 5.69 per cent to Bt26, Bangkok Bank 2.56 per cent to Bt120, Kasikornbank 3.38 per cent to Bt76.50 - marking a seven-year high - and Siam Commercial Bank gained 2.74 per cent at Bt75.

KGI Securities (Thailand) vice president for economics and strategy Adisak Kammool said that the euphoria was attributable to a buying spree by foreign investors in regional stock markets, including Thailand, Indonesia and South Korea.

Local investors also jumped on the bandwagon to pile up Thai shares. Their confidence increased after political protests were staged peacefully and Bank of Thailand data showed that the economy was on the path to recovery, Adisak said.

The central bank reported that the economy in the second quarter had sent stronger signals of recovery, due to a pick-up in domestic demand and higher-than-expected export growth.

Adisak said banking stocks were the big gainers yesterday, as their prices remained undervalued and investors anticipated that their second-quarter earnings would be solid.

"If buying pressure continues and the SET Index can break through the 795-level, the index can reach 805 points this week. However, I believe that the buying spree in bank stocks is just short-lived to buy stocks ahead of the announcement of second-quarter earnings this month," he said.

A source at a foreign brokerage said that liquidity driven by foreign investors was the main cause for the rally.

"Foreign investors have become net buyers of Thai shares in anticipation that the Thai economy will grow robustly next year after the general election is held late this year. However, if the election is delayed to next year, it would send an impact to the Thai stock market," the source said.

Regional gains also gave a big boost to the bourse, said Kiatnakin Securities deputy director Apisak Limthamrongkul.

Energy stocks, which have the largest weighting in the Thai market, also enjoyed a fresh yearly high for oil prices in the Nymex market at US$70.68 (Bt2,435) per barrel, he said.

Meanwhile, SET president Patareeya Benjapholchai said the SET's board of governors would be summoned to consider whether the target for companies to list on the stock market this year should be lowered.

The SET has targeted that 60 companies will list this year, but only three - Unique Engineering and Construction, Rasa Property Development and Total Access Communication - have made their debuts so far.

"It is quite difficult to achieve the target but we have tried our best and hope that more companies will list in the second half if the situation is stable. Whether we will cut our target or not will be clearer in the third quarter," she said.

Siriporn Chanjindamanee

The Nation