Now not the time to buy, brokers warn

Thai share prices have lost almost 11 per cent of their value, or about Bt475 billion in market capitalisation, in the continuing tumble from this year's peak of 884.19 points at the close of trading on May 21.

The slide has been due mainly to a selling spree by foreign investors. But advice from six brokers says the time is not yet right to begin accumulating stocks.

They say a Stock Exchange of Thailand (SET) Index level of 750-780 points will signal the time at which investors can begin snapping up Thai shares.

KGI Securities (Thailand) analyst Rakpong Chaisuparakul

KGI Securities believes the optimum entry point for investors is 750 points, given its latest event study of Thai market corrections. Foreign outflows show the SET Index should not fall more than 40 points from the current level of 790.

Also, to match average foreign net selling in recent key corrections, an additional Bt23 billion in net sales may be in the pipeline. At the 750-point level, it is unlikely that foreigners will sell Thai stocks, given the fact that although Thailand's inflation rose to 7.6 per cent last month, the rate remains lower than most countries in East Asia.

In the current correction, the SET Index has fallen 10.8 per cent since late last month and needs to fall another 5 per cent to match the historical average correction. Five per cent is equal to 40 points, which leads to an index of 750.

"It is quite difficult to predict the entry point at the moment, but fundamentally we believe 740 is the right level, and from our event study 750 is also the right one. What remains interesting are energy and banking stocks," he said.

Trinity Securities executive director Vajiralux Sanglerdsilla-pachai

"We believe the SET Index will bottom out in June or July. We expect it to be around 760-780 points at that time, and we recommend investors pile up stocks at these levels. Even though the index may fall further, it will be limited, and a Thai-share rebound should be seen," Vajiralux said.

Technically, July will be the right time to accumulate Thai shares, but fundamentally she hopes the right time will be in August.

The SET Index may rebound shortly, because US inflation figures, to be announced today, may not be as serious as expected, she said. However, the index will not break through the 820-point level.

Vajiralux recommends that investors buy PTT Exploration and Production, Banpu, Bangkok Bank, Siam Commercial Bank and Kasikornbank.

Seamico Securities

The broker recommends that medium-term investors snap up Thai shares when the SET Index falls to 750 points.

Recommended stocks are those of companies that are resilient to rising inflation and have net cash flows, such as energy, retail, communications and food and beverage stocks. Recommended stocks include PTT Exploration and Production, Banpu, Big C Supercentre, CP All, Total Access Communication, Thai Vegetable Oil, Central Plaza Hotel, Cal-Comp Electronics (Thailand) and Hana Microelectronics.

Capital Nomura Securities analyst Vorasinee Sangvornvetphan

The selling spree in the Thai stock market will be over at an SET Index level of 756-777 points, Vorasinee said.

She recommends a short-term investment strategy covering one or two weeks of taking a profit when the SET Index rebounds and lowering stock investments to 20 per cent of portfolios.

"The SET Index this round will not exceed 800-816 points, while 756-777 points is the buy-back level," she said.

For long-term investment, she recommends investors divide their money into two lots and use the first one to accumulate stocks at

about 787 points, while the other lot should be used to buy when the SET Index hovers around 756 points, in order to mitigate risks.

"For those who want a safe investment, take a short position in energy stocks as Thai shares drop in the current round," she said.

Stocks that reap benefits from the baht's depreciation and are export-related are recommended. These include Thai Union Frozen Products, Sri Trang Agro-Industry, Khon Kaen Sugar Industry, GFPT, Delta Electronics (Thailand), Cal-Comp Electronics (Thailand) and Hana Microelectronics.

Vorasinee also recommends investors pile up high-dividend-yielding stocks, including BEC World, Advanced Info Service, Unique Mining Services, Se-Education, MCS Steel, Supalai, Siam Makro, Thai Plastic and Chemicals, LPN Development, Rojana Industrial Estate, Ratchaburi Electricity Generating Holding, Thai Vegetable Oil, Precious Shipping and PTT Chemical.

Finansa Securities

Long-term investors should accumulate stocks when the SET Index falls to 750 points. If the US Federal Reserve keeps its key interest rate unchanged at its June 25 meeting, the Thai stock market may rebound shortly, the broker said.

"From June to July, the SET Index is likely to slump to 750 or 770 points, so that will be the time for fundamental stock accumulation."

The broker recommends Kasikornbank, Advanced Info Service and Bangkok Medical Services but places a lower investment weighting on Banpu and Lanna Resources.