Market View (Feb 22-26)

The SET Index moved in a narrow trading range last week given concerns about local political turmoil and the global liquidity neutralisation process. Thai investors might focus on what would happen after the court rules in the Thaksin assets case. If there are no major incidents on the streets, the equity markets should see a buying spree again. We, however, do not bank on that possibility given the bearish sentiment beginning to envelope emerging and Asian equity markets. Foreign funds flows continue to record outflows across Asia since January. The Thai market may have rebounded but how long can it last?

According to historical financial data, the Thai market has never defied the global downward trend. The scenario we envisage is that a rebound of the Thai stock market should be temporary. The MSCI Asia Pacific ex-Japan has declined slightly by 3 per cent since last December while historical study suggests a premature bullish run at this stage. The Thai stock market has declined moderately by seven per cent since January this year, which has not convinced buyers to rush in.

Stock picks: CP All, Charoen Pokphand Foods, and MCOT.

Vajiralux Sanglerdsillapachai

Executive director, Trinity Securities

Last week, the SET Index rose amidst negative internal and external factors. Political tension prior to the February 26 judgement day was priced in with SET level at below 700. However, we have concerns about discount rates in the US rising from 0.50 per cent to 0.75 per cent, as it implied a first step in the US exit strategy. We are concerned that other countries might follow the US direction, which would lead to negative global stock markets from funds outflows. The US dollar also gained. We expect the Dollar Index band will be in the range of 81-84. It will have a directly negative impact on the SET Index. The good news for the market was dividend payments by listed companies and upbeat economic figures. Our strategy is still to stay in tune with good dividend stocks like Delta Electronics, Hana Microelectronics, PTT Aromatics and Refining, Charoen Pokphand Foods, CP All and Siam Dr.

We expect the SET Index to be in the 680-708 points range this week.

Watch out for the China market, which reopens on February 22. It might see a negative impact from China's decision to raise the legal reserve by 0.5 per cent, with effect from February 25.