Brokers : stock index to reach 600

The present euphoria is being driven by expectations the secondquarter earnings growth of Thai corporations, particularly refineries, will improve, due mainly to inventory gains, he said.

The broker has revised its forecast on listed companies' earnings growth this year to 17.5 per cent, up from 12.5 per cent in the previous estimate.

As well, the stock market is being propelled by the weak US dollar following the hefty budget deficit and increase in asset allocation of foreign fund managers in last Friday's survey that raised investment in commodity products to "slightly overweight", from "slightly underweight".

The higher investment weighting in commodity products gives a boost to the Thai stock market, onethird of which is energy stocks, he said.

Investors at the moment can increase their investment by 5 per cent of the investment portfolio for shortterm investment in commodityrelated stocks, including PTT, PTT Exploration and Production, Banpu and Thai Oil.

However, Thanomsak recommended investors take a profit when the SET Index reached 600 points.

The Thai stock market yesterday was swung wildly before closing almost 1 per cent down at 574.3 points. Turnover was brisk at Bt33.33 billion.

The SET Index has surged almost 40 per cent since its trough in March.

Seamico Securities senior vice president Waraporn Wiboonkanarak echoed Thanomsak's view by saying the SET Index would break 600 points.

At the 600 points, the index would exceed the broker's target of 580 points for the year.

"The present rally is a bearmarket rally, not a bull run, because trading volume is not sufficient. The euphoria is resulting from the flow of funds, but the economy still carries risk even if it is a real recovery," she said.

Investors should gradually lock in profit when the SET Index goes up and buy when it slides back down to 550-560 points.

An Asia Plus Securities analyst said the global stock market's euphoria gave the blessing to the SET Index and agreed it would likely hit 600 points.

However, energy stocks are at the centre of the present rally, and their share prices have almost reached fair value this year.

The analyst recommends shortterm speculation in Thai Oil, Banpu, Thoresen Thai Agencies and Precious Shipping.

A Tisco Securities analyst was the most optimistic. That one said the SET Index would not only break through 600 points, but also hit 630 points this month.

However, the analyst recommends longterm investors gradually reducing their investment portfolio in the stock market when the index hovers around 590-600 points and hold onto the cash.

The analyst recommends scooping up shares in Bangkok Bank, Kasikornbank, PTT Chemical, Thai Oil, Land & Houses, Asian Property Development, Amata, ItalianThai Development, Ch Karnchang, Advanced Info Service, Total Access Communication and BEC World.