The SET Index could climb to 1,400-1,450 points by year-end now that the political turmoil shows signs of abating soon, while listed companies could show earnings growth of 12.2 per cent, dividend yield of 3.3 per cent and total return of 14.9 per cent.
Therdsak Thaveeteeratham, executive vice president for research at Asia Plus Securities, said yesterday that the company also believed that the Bank of Thailand would cut its policy interest rate again to 2 per cent this year.
This will help boost the economy in the second half, although household debt has soared to 70-80 per cent of gross domestic product.
Chatchaphol Srivaleepan, vice president of business development and marketing development at Krung Thai Asset Management (KTAM), said the foreign selling trend was expected to lose steam and if the political situation improves, foreign investors would come back to Thailand because the stock market here is one of the cheapest in the region and has plenty of potential.
Foreign investors yesterday were net buyers, at Bt1.3 billion. Foreign net buys on Monday were Bt1.14 billion.
Kesara Manchusree, executive vice president and head of the markets division at the Stock Exchange of Thailand, said foreign investors were still interested in the Thai bourse. Other countries in the region such as Indonesia, the Philippines, Malaysia and Bangladesh are also experiencing the same problem of foreign-capital outflows.
"Investors can see that the region is unstable and it isn’t just Thailand that is experiencing the same thing, so their confidence and interest in the Thai stock market still remain, and as soon as the internal situation is solved, they will come back," he said.
Yesterday the SET gained 6.6 points or 0.49 per cent from Monday to close at 1,345.82. It has been rallying for seven straight days from 1,301.38 on February 24.
KTAM sees opportunity in crisis and believes that SET 50 stocks are the most interesting for this year.
The SET 50 groups the top 50 companies by market capitalisation and liquidity. Last month they accounted for 74 percent of the SET Index and 62 per cent of trading. Their dividend yield averaged 3.4 per cent.
"With the reduction in political tension in the nation, KTAM sees perfect timing for investors to invest in SET 50 stocks at comparatively low prices," chief executive officer Somchai Boonnamsiri said.
"The SET 50 will also play a big role when the Asean Economic Community is launched in 2015," he said, noting that the Set 50 Index normally outperforms the main SET Index during tough times, as seen in 2008.
"This shows that the country’s corporate strength is mainly based on the strength of the SET 50 Index," he said.
Earnings per share for the SET 50 companies should grow by 14.2 per cent this year with a price-to-earnings ratio of 13.5 times. The SET 50’s EPS are targeted at 74.45 per cent and the index is estimated to close at above 1,000 points by year-end.
The stock market this year is expected to change from "fund-flow driven" to "fundamentals driven" because the desire of foreign investors to pull out of the market is about to be satiated, KTAM believes.