Baht almost hits 5-mth high

The baht opened at Bt34.83-Bt34.85 to the greenback and closed at Bt34.56-Bt34.58, off the day's high at Bt34.50. 

Seven of Asia's 10 mostactive currencies, excluding the yen, gained against the dollar, while the benchmark MSCI Asia Pacific Index rallied for a sixth straight day.

A local currency trader said Finance Minister Korn Chatikavanij's remark that Thailand would post a currentaccount surplus also gave a boost to the baht.

The baht's recent appreciation continues and the unit is likely to test the psychological Bt34/$ level soon, the trader said.

"Declining risk aversion sees people cutting demand for the greenback to move money back into the region's stock markets, including Thailand," Charl Kengchon, an economist at Kasikorn Research, was quoted as saying by Bloomberg.

"The baht is also gaining support from the huge surpluses in the trade and current accounts as imports shrink," he said.

Kasikorn Research Centre said in a paper released yesterday that the baht's appreciation was inevitable, as the selling spree in US dollars would continue and Thailand is predicted to record a US$8 billion (Bt276 billion) trade surplus this year, compared with a mere $200 million last year.

However, inflow in Asian stock markets - a key factor pushing the baht up - will be tested occasionally throughout the year, as the global recession has not yet reached the bottom and Thailand's trade surplus in the remainder of the year will be lower than in the first quarter, the paper stated.

Meanwhile, Thai shares yesterday swung wildly. The SET Index started the day with a gain and briefly headed south before closing at 535.18 points for a gain of 1.41 per cent, off the day's peak at 540.22. Turnover was heavy at Bt30.33 billion.

Big marketcap energy stocks led the rise. PTT was up 3.77 per cent at Bt220, PTT Aromatics and Refining rocketed up 11.04 per cent to Bt17.10, Thai Oil jumped 7.19 per cent to Bt37.25, IRPC surged 5.92 per cent to Bt3.22 and PTT Chemical shot up 15.61 per cent to Bt50.

An analyst at DBS Vickers Securities said that selling on the facts might be seen in energy, agribusiness, and commercial and residential realestate stocks when they announce their first-quarter results this week.

Even if the SET Index corrects slightly, the uptrend will continue as long-term investors consider local stock prices are not overvalued and forecast that 2010 corporate earnings will recover strongly, the analyst said.

Commodity-related firms, including oil, natural gas, petrochemical, steel and agribusiness, are expected to deliver strong gains in their 2010 earnings, thanks to the expected economic recovery, the analyst added.

The broker estimated that the 2010 earnings of stocks under its coverage, which represents 70 per cent of the SET's market capitalisation, would rise by 16 per cent year-on-year, compared with a 3-percent year-on-year increase forecast for 2009 earnings.

The securities house's top picks are PTT Exploration and Production, PTT, Kasikornbank, Thai Vegetable Oil, Advanced Info Service, CPN Retail Growth Fund, Supalai, Italian-Thai Development, Sino-Thai Engineering and Construction and Tata Steel (Thailand).

An analyst at Finansa Securities said the volatility in the Thai stock market yesterday could be ascribed to profittaking, following the strong gain propelled by the euphoria in overseas stock markets as the US banks' stresstest results were in line with expectations.

The resurgence of the red-shirt rally and the swine-flu outbreak are factors that investors should keep a close watch on, the analyst said.

The broker's strategy is profit-taking for shortterm investors and buying on weakness for long-term investors.