December 29, 2012 00:00 By ACHARA DEBOONME
The Thai stock exchange witnessed a spectacular performance in 2012, driven by the strong domestic economy, which concurrently strengthened Thai companies financially and drew huge foreign fund inflows.
Though failing to sustain the 1,400-point psychological high, which it briefly achieved yesterday, the Stock Exchange of Thailand composite index gained 36.06 per cent to end the year at 1,391.93 points, making it one of the best performers in the world. Market capitalisation rose 41 per cent year on year to Bt11.83 trillion.
Thanks to quantitative easing in developed economies and the strong domestic economy that attracted such “hot money”, foreign investors ended the year as net buyers, with purchases outpacing sales by Bt76 billion, against net sales of Bt5 billion in 2011, according to SET data.
The net-buy position hit Bt86 billion after big-lot adjustment, the highest since 2005, according to Asia Plus Securities. The securities house foresees a modest rise in 2013, because of the hefty increase this year, despite the continued growth in listed companies’ earnings. Earnings-per-share growth is estimated at 15 per cent next year.
The spectacular statistics were revealed on the same day that a Bank of Thailand official hinted at possible upward revision next month in the 2013 economic forecast. The revision may be made when the Monetary Policy Committee (MPC) convenes on January 9.
The official said there was a good chance that gross domestic product would expand beyond the recently forecast 4.6 per cent. The projection for this year is maintained at 5.7 per cent, putting Thailand among the top 10 countries with the strongest economic growth.
Rahul Bajoria, an analyst at Barclays Research, said in a research note that there was little chance that the MPC would cut the policy rate at the January 9 meeting, unless the global economy experienced a severe downturn that would affect the recovery in exports.
After single-digit growth this year, Thailand’s exports, which constitute 70 per cent of GDP, are expected to grow nearly 10 per cent next year. Tourism authorities are convinced that Thailand will achieve the target of welcoming 22 million tourists this year with the aim to push tourism revenue to Bt2 trillion by 2015. The tourism industry generates about 6-8 per cent of GDP.
The strong post-flood recovery of the Thai economy has boosted investment sentiment. The floods were highlighted as the main catalyst driving the government to make enormous investments on infrastructure work, which would spark new private investment and sustain the economic growth amid declining export demand.
As foreign funds flowed to Thai shares and bonds, the SET Index hit a number of 16-year highs during 2012. On December 27, the index hit 1,397.19 points, the highest in 16 years and 10 months.
Thai companies are also boosting investment in and out of the country. And the stock market’s rise offered a golden chance to raise cheap funds.
A total of 154 listed companies made public offers to raise a total of Bt262 billion, the highest in 10 years. The biggest fund-mobilisation deal was from PTT Exploration and Production, worth Bt92 billion – which is also the biggest public offer by a listed company since the stock exchange was established 38 years ago. Trailing behind was Krungthai Bank, which raised Bt35 billion.
Paveena Sriphothong, head of the SET Issuer and Listing Group, said that with the high share prices, companies could raise their targeted amount issuing fewer shares. This in effect limited the dilution effect – the negative impact on existing earnings per share.
“Listed companies’ fund mobilisation strengthened them them financially and supported their business expansion,” she said.