Analysts are upbeat on property, banking sectors

The stock market's momentum this year will continue. Banking and property sectors are expected to outperform the market this week.

Property sector: We believe that the sector's earnings have already bottomed in the first quarter. Their combined quarterly net profit fell 9 per cent year on year as home-buyers delayed their purchases, waiting for the reduction of special business tax and transfer fees. Their earnings will jump substantially in the second quarter. Land and Houses with fair value of Bt10.85, LPN Development with fair value of Bt10.59 and Major Development with fair value of Bt6.37 are recommended to buy. Banking sector: It is time to snap up stocks in this sector as their current prices are lower than fair value. Outstanding stocks are Siam Commercial Bank with fair value of Bt98 and Bank of Ayudhya with a fair value of Bt30.

The resistance of the SET index is at 880 points and the support level is at 840.

Kim Eng Securities (Thailand)

We believe the market is likely to trade more actively in the 840 to 870 range through to the end of the month for the following reasons:

1 Stocks gaining on soaring energy prices such as PTT Exploration and Production, PTT and Banpu are likely to offset inflation-triggered losses of blue chips, including big banks, Siam Cement, Land and Houses, Advanced Info Service, PTT Aromatics and Refining as well as IRPC, putting strong support at the 840 level.

2 Institutional net-selling by both foreign and local funds of Bt1.9 billion since May 9 on inflation anxieties and a weakening baht against the dollar may have reached a short-term peak.

3 Catalysts such as the government's pro-growth policies including state-pay increases, property-tax breaks and spending on mass-transit projects; strong gains in agricultural prices; and white-collar wage increases initiated by banks and firms in the CP Group should all help boost trading sentiment.

4. We are looking at 6-per-cent GDP growth this year, supported by improving private consumption and investment, a factor that is also likely to boost corporate earnings by 29 per cent - or 7.84 per cent without the banking sector. Trading on a price-earning ratio of 12 times, the Thai market is among the region's cheapest.

Sukit Udomsirikul

Assistant managing director, Siam City Securities

The Thai stock market this week is expected to go up further and support factors are as follows:

1 Foreign investors have raised the investment weighting in stock markets across the world including the Thai bourse following the reduced volatility in Wall Street.

2 The latest survey of economists showed that the possibility of a US economic recession declined from 70 per cent to 60 per cent.

3 US economic indicators improved while inflation in April increased at a lower-than-expected rate. This signalled that the US Fed would not hurry to raise interest rates.

4 The Thai GDP in the first quarter is expected to grow by 6 per cent, above the 5.5 per cent forecast originally.

5 Thai listed companies' first-quarter earnings surged at around 38 per cent year on year, which was greater than the earlier estimate and likely to be the best in the region. This confirmed that the Thai stock market was not affected by the US sub-prime turmoil.

6 Profit-taking in the steel and energy sectors might pose a threat to the Thai stock market this week but the impact will be limited. I recommend accumulating big-cap stocks, which will benefit from capital inflows. These stocks are PTT Exploration and Production, PTT, Advanced Info Service, Thai Oil, Thoresen Thai Agencies, Banpu, Bangkok Bank and Kasikornbank. Export-related and securities stocks are recommended for speculative buying.