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Published on March 24, 2008

Therdsak Thaveeteeratham,

Asia Plus Securities senior VP

The SET Index last week dropped below the 800-barrier level again on foreign selling. In the short run, we believe the foreign investors' sell-off will continue.

Asia Plus Securities estimates that foreign investors will gain about 27 per cent - 16 per cent of which derives from foreign-exchange gains and 11 per cent from capital gains - from investment in Thai shares, and it makes sense to take a profit.

We estimate that foreign investors' net accumulative buy in the SET  for the first three months was Bt17 billion, and that the investment by foreign institutional investors in terms of strategic partners stands at Bt125 billion.

We believe the leftover amount can flow out easily if foreign investors assess that the investment carries a higher risk.

Local politics and the US recession still pressure the market, while the expected interest-rate cut at the next Monetary Policy Committee meeting is a positive factor.

The SET will move in a range of 790-830 points this week. We recommend "buy" on Preuksa Real Estate, Land & Houses, Asian Property, SC Asset Corp, Siam Makro, Big C Supercentre and Syntech Construction.

Kim Eng Securities (Thailand)

We now recommend buying into Thai shares. Upswings in the investment cycle coupled with the expectation of lower interest rates are likely to drive Thai stocks higher than others in the region.

More stable trading on Wall Street and possible inflows from investors selling commodities - and who may now be looking to equities - may also boost confidence this week.

After recent falls, PTT and PTT Exploration and Production stand to gain on potential fund inflows after the most recent sell-off in crude oil.

Oil prices have risen 15 per cent since February 2004, but PTT stock fell by 4 per cent and PTTEP rose only 2 per cent in the same period.

PTT's price-earnings ratio has fallen to 8.7 times, while we

expect 28-per-cent growth in earnings per share from PTTEP this year.

Big banks and consumer plays should further rebound on expectations of lower interest rates.

We recommend Kasikornbank, Bank of Ayudhya, Central Pattana, BEC World and Home Product Centre.

 Both Siam Cement and Thai Plastic and Chemicals should also attract buyers due to their latest investment plans.

The companies last week announced a planned joint investment in a US$4-billion (Bt125 billion) petrochemical complex in Vietnam.

Sukit Udomsirikul,

Siam City Securities

assistant managing director

Volatility in the Thai stock market will continue this week, as both internal and external factors still surround the market.

US financial institutions releasing their first-quarter earnings might prove to be either pluses or minuses for the SETt. The government's grass-roots stimulus package and optimism over the first-quarter earnings of Thai financial institutions should be a blessing.

However, the mounting anxiety over political uncertainty is once again haunting the stock market.

We expect that bank stocks and domestic plays will lead the market and outperform commodity stocks this week. Commodity share prices will fluctuate in the short run, given the oil-price correction.

The bail-out of Bear Stearns, the US largest investment bank, sent the global stock markets into turmoil, with investors concerned about who will be next. However, the better-than-expected earnings of Lehman Brothers helped cushion Wall Street's steep fall.

Looking at Lehman Brothers' financial statement, we find that its write-down at US$3.5 billion (Bt109 billion) was lower than analysts' estimates. So, I forecast that it is still at risk of a further write-down. We should keep our eyes open for other US financial institutions recording their write-downs in the same way as Lehman Brothers.

Commodity-market turbulence will continue this week.

The Nation