The Stock Exchange of Thailand (SET) index yesterday rose by 1.6 per cent to mark a new high of 853.68 points in two years now that investor confidence is returning thanks to positive results from the European Union's stress tests last week.
Only seven banks failed the tests.
Trading in the banking and energy sectors yesterday was mainly behind the surge in the SET index.
Yesterday, Kasikornbank's stocks closed at Bt105, up 66.6 per cent, Siam Commercial Bank surged 5.51 per cent to close at Bt91 and Krung Thai Bank rose by 3.05 per cent to close at Bt13.50 each. Meanwhile, PTT rose 3.24 per cent to close at Bt255 and PTTEP closed at Bt147 per share, up 3.87 per cent.
According to the Committee of European Banking Supervisors' report, 84 out of 91 banks passed the stress test. HyPro Real Estate in Germany, ATE Bank in Greece and five banks in Spain, namely Banca, Civica, Cajasur, Diada, Espiga and Ennim failed because they had an adequacy ratio a tier below the standard 6 per cent. This has made them increase their capital share to the combined amount of US$4.5 billion (Bt144.8 billion).
An analyst at Finansia Syrus Securities said the stress-test results were in line with foreign investors' expectations, reflecting a slight rise in global stock markets and a better US economy. The Dow Jones index has been rising since the end of last week and this has been affecting the increases in Asian stock markets.
"The result of the stress tests were good, reflecting that the financial system in the EU should not have more problems than expected. As a result, investors will have more confidence and shift from the bond market to stock market," the analyst said.
He added that the euro was still strengthening against the US dollar, as were currencies in the region like the Thai baht. Therefore, the trend of the fund flow would be more to the Thai stock market.
From early July until now, foreign investors have spent Bt2 billion in the Thai bourse.
As for the Sunday evening explosion on Rajdamri Road, the analyst said this was a sure sign of the country's unstable politics, though the chance of the emergency decree being lifted was very slim.
An analyst at Kim-Eng Securities, however, predicted that SET index could easily stand above the level of 850 points. This was in response the Bank of Thailand revising its 2010 GDP forecast from 4.3-5.8 per cent to 6.5-7 per cent. Foreign capital has been flowing into the country over the past week as a result of this revision.
Meanwhile, OfficeMate is debuting in the Market for Alternative Investments today and its stocks are expected to close above its IPO price of Bt4.9 each, managing director Worawoot Ounjai said.
The SET yesterday revealed that it was developing a trading system in close cooperation with brokerages that will support all securities products and smoothly connect with foreign exchanges. This new system will support the needs of domestic and foreign investors, increase business opportunities for securities companies, and enhance the Thai capital market's competitiveness in the global arena.
"SET has proposed its IT Master Plan to top executives from securities companies so we can prepare our operations and personnel to reach a higher level of compliance with international standards," SET president Charamporn Jotikasthira said.
The IT Master Plan is one of SET's strategies to build a solid foundation for development, by enhancing the trading system's efficiency and supporting the trading of all products, equities, futures and bonds, on a single platform.