Get ready to sell, say brokers

The stock market will break through the 900-point barrier in one or two weeks and investors should lock in profits when the SET Index hovers above that level, analysts said yesterday.

Pichai Lertsupongkit, senior vice president of Thanachart Securities, said investors should cash in their stocks when the index surges to about 920 points and then buy them back later.

Shares would test the 900-level soon as record oil prices push up energy-related stocks, which account for one-third of the bourse's market capitalisation, he said.

The robust earnings growth of listed companies in the first quarter also gave a lift to the stock market, he said.

The Stock Exchange of Thailand earlier reported that the combined first-quarter net profit of 455 of the 494 listed companies soared 33 per cent on year to Bt152 billion.

However, concerns over inflation, especially with oil prices hitting new highs, and the murky political situation, as well as profit-taking following the rally, would dampen market sentiment and that would present an opportunity for investors to buy back shares in the second half, Pichai said.

Stocks had surged 5 per cent over the five-day winning streak before falling 1.09 per cent yesterday to 874.54.

Sirinattha Techasiriwan, senior vice president of Syrus Securities, said the SET Index at 924-950 points, from a technical standpoint, seemed to be risky.

"It is impossible to see the index arrive at 1,000 points," she said.

The SET is likely to lose momentum if the second-quarter earnings of US financial institutions fail to meet analysts' expectations, she said.

The local political situation has not yet rung alarm bells but it will become a risk factor if it causes the deferral of the government's economic stimulus measures, she said.

Sombat Narawutthichai, secretary-general of the Securities Analysts Association, forecasts the SET Index will reach 900 points in a week or two on the back of the euphoria in energy stocks as well as capital inflows.

Domestic politics, interest rates and the US sub-prime impact are the major threats to the Thai stock market, he said.

However, the SET Index should reach 958 points by the end of this year, he said.

The association will not revise upwards its 2008 earnings growth prediction for listed companies even though oil marked a new record high above US$130 (Bt4,146) per barrel, he said.

Listed companies' earnings will rise at an annual rate of 20 per cent, according to industry estimates.

The energy sector will reap the biggest windfall from the skyrocketing oil price while the commercial bank sector will not feel a pinch, he said.

Even though the property sector would be hurt by the oil price, it would gain from the government's tax breaks that were implemented recently.

Vorasinee Sangvornvetphan, an analyst at Capital Nomura Securities, said profit-taking might enter the picture after the market bounded up 4 per cent over one week.

With a string of negative factors looming - including the US Federal Reserve's cut in its GDP growth estimate this year from 1.3-2 per cent to 0.3-1.2 per cent, the record oil price and local politics - investors should liquidate their holdings now and re-enter the market when the SET Index stands at 865-870 points, she added.