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Published on July 25, 2007

The SET Index began the day with a strong gain and headed further north to close 2.12 per cent higher at 880.95, off the day's peak of 884.64. It was the highest point for shares in 10 years and seven months. Turnover was brisk at Bt43.88 billion.

Foreign investors bought Thai shares with a net position of Bt1.88 billion.

The energy sector led the rally. PTT and its group were the most active stocks. RRC chalked up a 5.97-per-cent gain to Bt25.75, ATC jumped 8.45 per cent to Bt77, Thai Oil surged 4.82 per cent to Bt87, PTT itself rose 5.81 per cent to Bt328 and PTT Exploration and Production was up 0.8 per cent at Bt126.

The stock market has risen almost 30 points, or 3.57 per cent, over the past two trading days, propelled by the planned amalgamation of Aromatics (Thailand) (ATC) and Rayong Refinery (RRC).

The baht ended the market yesterday at 33.62/33.64 to the US dollar, stronger than 33.69/33.71 at the opening.

An Ayudhya Securities analyst said shares would test the 900-point barrier this week or next if euphoria continued to buoy the Dow Jones Industrial Average.

"It is possible we will see the SET Index at 1,000 this year, although we [the brokers] forecast that it will happen next year," he said.

Capital continues to flow into Thailand following the government's measures to reduce pressure on the strong baht. Investors' consideration of the measures had only a minimal impact on the currency, the analyst said.

The measures include allowing listed companies to purchase up to US$100 million (Bt3.37 billion) per year for foreign direct investment abroad, abolishing a requirement that Thai residents who receive foreign currency sell it within 15 days; and extending the time for which Thai residents or corporations can hold foreign-currency revenues before repatriating it from 120 to 360 days.

Therdsak Thaveeteeratham, first vice president for research at Asia Plus Securities, echoed the view of the Ayudhya Securities' analyst by saying a price-to-earnings (P/E) ratio of 14 for the stock market was possible, thanks to the continuing capital inflow.

"The stock market now has a P/E ratio of 13, and our stocks remain lower than [those on] other stock markets in the region. A P/E ratio of 14 will occur at 914 points on the SET Index," he said.

The stock market has surged very rapidly because investors are at ease with the government's measures, seeing that they do not create anxiety about capital inflow, Therdsak said.

Kiatnakin Securities assistant vice president Wiriya Lappromrattana said the amalgamation of ATC and RRC boosted stock-market sentiment and this mood could be seen in the significant rise in the stocks of PTT and its group.

She recommended that investors who already held either ATC or RRC stock convert it to shares of the merged firm. However, those who do not hold these shares should avoid piling up stocks, because the price of both has increased to a certain level.

Kiatnakin Securities estimates that fair values for ATC and RRC are Bt87 and Bt29 respectively, based on their earnings forecasts for this year, she said.

Oranan Paweewun

The Nation