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Published on November 13, 2007

Shares shed 1.45 per cent yesterday as investors shied from risk following steep falls on Wall Street and in the region.

Despite the bearish trend, Citicorp Securities (Thailand) raised its 12-month target for the Stock Exchange of Thailand Index to 990, from 970 before.

The index went into a tailspin from the bell. It closed

at 861.93, off its intra-day trough of 856.56. Turnover was thin at Bt16.34 billion. Foreign investors were net sellers of shares worth Bt4.55 billion.

The market continues to suffer short-term pressure from the sub-prime mortgage crisis in the US and fears of an economic slowdown in that country, said Fareast Securities analyst Veerachai Krongsamsri.

The bourse's direction depends on Wall Street and a Bank of Japan interest-rate decision, he said.

If Japan raises its policy rate, global investors will unwind their carry-trade positions, due to yen appreciation, creating a global sell-off.

Nithi Wanikpun, head of equity research at Citicorp Securities (Thailand), said the forecast upgrade reflected expected 15-per-cent growth in earnings per share next year for its coverage universe.

Citicorp is overweight in energy, financials and utilities.

Led by PTT, the energy sector continues to drive market-earnings growth. Citicorp's in-house view is that oil prices will remain high until at least 2010.

"PTT and PTT Chemical are our top energy picks. Notwithstanding the trend that the stock market tends to perform well between November and January, the general election in December will provide further impetus. The election should provide positive factors that should lower the high-risk premium accorded to the market after the 2006 coup," he said.

He recommends that investors look at banks, especially Bangkok Bank and Kasikornbank, for good exposure to any economic recovery.

Nithi believes the inflationary environment could limit the Bank of Thailand's ability to cut rates any further and recommends Ratchaburi Electricity Generating, Glow Energy, Advanced Info Service and BEC World as havens for investors worried about inflationary pressure.

The Nation