Buy shares from now to mid-year : brokers

Equities have already fallen over 50 per cent so far this year, while the Tom Yum Kung crisis in 1997 knocked off 86 per cent from the market, so the current slide might taper out at 65 per cent.

Sombat Narawutthichai, secretarygeneral of the Securities Analysts Association, said Thai stocks are unlikely to plunge by 80 per cent because the economy is in much better shape than in 1997.

"Now the market is already near the bottom. I think it should fall by 60 to 65 per cent, then rebound very quickly according to statistics in the past," he said.

Kongkiat Opaswongkarn, CEO of Asia Plus Securities and president of the Securities Analyst Association, said the storm should pass by midyear, so it's the right time to gradually accumulate good stocks.

"We have passed the most difficult time already. We should consider picking up on equities, since an upward trend is waiting ahead," he said.

Supavud Saicheua, president of Phatra Securities, suggested investors add stocks to their portfolio as opportunities present themselves and hold them for at least three years before taking profit. Usually, slowdowns last for one year and the economy needs another year for recovery before entering an upward cycle.

"This economic slowdown is expected to touch bottom around the second and the third quarter of next year, while eight quarters are needed for recovery because it fell so sharply. Financial institutions need to take time for debt restructuring and business restructuring, so the situation should return to normal at the end of 2010," he said.

The risks that the market can't anticipate are when the property crash in the US would end, whether China 's GDP would really grow 8.5 per cent to keep global GDP growth at 2 per cent next year, and if the political uncertainties in Thailand would persist. Investors are recommended to load up on energy, commerce and telecommunication stocks until they make up about 3040 per cent of their portfolio over the next year before the global and domestic economies fully recover.

Investors should conduct stress tests for investment planning to prepare for any possible impact. The US financial crisis was expected to get worse, with bankruptcies of more financial institutions and increases in nonperforming loans (NPLs) in the auto, credit card and education industries, he added.

Rapee Sucharitkul, president and CEO of Kasikornthai Securities, projects oil prices escalating again over nine to 12 months because speculative trading by hedge funds has dried up while the Organisation of Petroleum Exporting Countries was cutting back on production.

Earning of the commerce and telecommunication sectors would continue to be good while the banking system was currently facing possible increases in bad assets.

His observations assume no additional negative factors in the world's largest economy and the US recession bottoming out in the third quarter next year.

"We can see the stock index picking up in the first quarter, however, it depends on the US economy and domestic banks' NPLs," he said.

Kobsak Pootrakool, executive director of the SET Research Institute, also suggested that longterm investors take this opportunity to get hold of any stock they really wanted. Investors should take into account a stock's value instead of waiting for the lowest price.

"The bearish market has been caused by market sentiment. If the worries fade out, prices will go up and investors might not take a position in time. Whoever has cool money and can face risk should step into the market now," he said.

Kasikornthai Securities has made the stress test that economic growth next year would be only 2 per cent, which would cause average earnings of listed companies to sag by 50 per cent from this year. The worstcase projection, however, is the SET index at 530.

Rapee said actual economic growth could be lower than 2 per cent if the US crisis gets deeper and crimps the Kingdom's exports and tourism.

Investors could conduct the stress test that the economy would mark flat or negative growth. They should abandon the usual analysis that clings to historical dividends or book value.

Worawan Tarapoom, managing director of BBL Asset Management, said investors could pile up on dividend stocks as well as infrastructurerelated, energy and telecommunications blue chips.

Kobsak believes that the central bank would make gradual and sequential cuts in its policy interest rate.