The stock market's bull-run is expected to continue, with one brokerage house foreseeing the SET Index rising to 1,100 points within six months.
While Bualuang Securities expects the Stock Exchange of Thailand Index to reach 960 points this week and Asia Plus Securities predicts 999 points by the end of the month, DBS Vickers Securities (Thailand) forecasts 1,100 points within six months thanks to abundant liquidity, a resumption of investment after the Map Ta Phut fiasco, the buoyant outlook for 2011 and favourable political sentiment.
It is also expected that the wider US-Thailand interest-rate gap will attract more fund flows to the Kingdom.
DBS expects the first US Fed fund-rate hike in the third quarter of 2011, against an overall 100-basis-points increase in Thailand in the second half of this year.
While urging the Bank of Thailand to let the baht appreciate in line with its regional peers, Paiboon Nalinthrangkurn, president of Tisco Securities, said inflows should not cause alarm, given that during April and May foreigners sold Bt60 billion more of Thai stocks than they purchased.
He expects the index to pass the 1,000 level this year or next, but believes profit-taking is around the corner after the 200-points increase in the SET in only three months.
ABUNDANT LIQUIDITY
DBS said abundant liquidity in the market had historically always pushed the stock market up substantially, sometimes beyond fair levels, as in 1993, 1999 and 2003.
At the new target, the market is trading on a price-earnings ratio (PER) of 14 times for forecast 2011 earnings.
According to Tisco, the market is currently trading at 13 times on 2010 PER and 11 times on 2011 PER, which is in line with multiples of 13.3 times and 11.4 times for the region.
"Definitely, if the SET Index rises further alone, to 1,100, it would be trading at a premium to the region. Anyway, we don't think that will be the case. We believe share prices will rise across the region, but the magnitude should be higher in Thailand, Indonesia and Singapore. In the event that there were many positive earnings surprises, from energy stocks after oil prices going up next year, the index would be trading at lower than 14 times at 1,100 points," said Chirasit Vuttigrai, deputy head of institutional research of DBS.
Yesterday, the SET Index continued last week's 29.53-point gain, to close at 931.52 points.
Turnover was Bt63 billion, a nearly four-year high and approaching the all-time daily record of Bt72 billion on December 19, 2006.
Since July, average daily turnover has risen to more than Bt30 billion, while last year's average was only Bt18 billion. The Thai bourse previously lagged its regional peers, being held back by political turbulence.
Last week, foreign investors were net sellers in Indonesia, the Philippines and Taiwan. They were net buyers in South Korea and Thailand, according to SCB Securities.
Asian markets yesterday rose in tandem, cheered by an improvement in US economic indicators, which encouraged investors to put more money into risk assets.
Table: Daily turnover
- Foreign investors have turned to net-buyers since July, pushing the market trading volume near the Bt72 billion record high registered in 2006.
January/ 18.67
February/ 14.06
March / 24.71
April / 24.78
May / 23.65
June / 21.42
July / 30.02
August / 36.27
September (1-6) 53.14
September 6 63.12
Source: Stock Exchange of Thailand