Set surges past 500 on global economy hopes

Thai shares yesterday surged past the psychological 500 level for the first time since October on hopes that the global economy is starting to recover.

The SET Index started the day with strong gains and headed further north to close at a high of 506.26, a rally of almost 3 per cent. Turnover was moderate at Bt20.26 billion.

Big market-cap stocks were at the centre of the buying spree. PTT rose 5.28 per cent to Bt199.50, PTT Exploration and Production jumped 5.31 per cent to Bt109, Thoresen Thai Agencies shot up 10.37 per cent to Bt18.10, Bank of Ayudhya surged 5.26 per cent to Bt12 and ACL Bank gained 13.64 per cent at Bt5.

Shares have now soared 23 per cent from this year's trough of 411.27 on March 9.

An analyst at Kiatnakin Securities said the euphoria was driven by capital inflow, which is in line with regional stock markets as investors are more at ease about the global economic situation after some indicators showed signs of recovery.

Singapore's Straits Times Index was the best performer, rallying 5.65 per cent. Hong Kong's Hang Seng Index gained 5.54 per cent, and the benchmark Shanghai Composite Index jumped 3.32 per cent.

"The current level is the time for investors to take profit. The strong gain is propelled by foreign investors' more positive view about economic recovery," the analyst said.

However, the announcement of the stress-test results of US banks to be released on Thursday, and swine flu, are the issues of most concern.

The same analyst recommended investors to sell stocks.

Bob Parker, vice chairman of Credit Suisse Asset, was quoted by Bloomberg as saying he was bullish about the overall Asian stock market, which he believes will be the world's best performer this year as earnings growth in the region rebounds first and the Chinese government's stimulus programme bolsters its economy.

After Asia, investors should buy stocks in Latin America and the US, while Europe and Japan will underperform, he added.

"Asian equity markets, particularly if you look at price-earnings figures relative to dividends, earnings growth and GDP growth, are very cheap indeed," Parker said yesterday from Bali, Indonesia.

Meanwhile, the baht might not appreciate this year despite a large current-account surplus, said Pongpen Ruengvirayudh, senior director of the Bank of Thailand's Financial Markets and Reserve Management Department.

She said other factors might influence the baht to move in the other direction amid uncertainty in the global financial market. In addition, the country will not be posting as big a current-account surplus as expected.

"Don't think that the expected current-account surplus will make the baht stronger and the central bank will step into the market," said Pongpen.

The central bank has forecast a trade surplus of US$10.5 billion (Bt367 billion) to $13.5 billion and a current-account surplus of $11.5 billion to $14.5 billion this year.

The senior director said the baht had been stable due to market forces, while other regional currencies have appreciated incessantly against the dollar.

It has been stronger by slightly more than 1 per cent so far this year, in line with currencies of neighbouring countries.

She said the baht had been moved by supply and demand in the market. The supply of the dollar was from capital flows and sentiment towards the greenback.

The central bank, however, will intervene to stabilise the currency when needed.