Thursday, September 10, 2009

Thailand's SET rises beyond 700

Shares yesterday punched through the 700-psychological level to an almost 13-month high, propelled by the insatiable buying spree of foreign investors and the rally in Asian stock markets.

The SET Index extended its sixday winning streak by starting the day with a gain before heading further north to close up 1.08 per cent at 703.09 points, off the day's high of 710.62. Turnover was brisk at Bt36.68 billion. The closing level was unseen since August 18 of last year.

PTT and its subsidiaries were at the centre of the rally. PTT advanced 1.54 per cent to Bt264, PTT Exploration and Production (PTTEP) gained 1.03 per cent to Bt147, Thai Oil (TOP) surged 2.17 per cent to Bt47 and PTT Aromatics and Refining (PTTAR) edged up 1.92 per cent to Bt26.50, while IRPC dipped 0.04 per cent to Bt4.28, off the day's peak at Bt4.40.

Mobile phone service providers also climbed up on a report that the telecom regulator will by the end of this year open bids for the 15year licences to provide longdelayed thirdgeneration services.

Advanced Info Service (ADVANC) advanced 3.42 per cent to Bt98.25, Total Access Communication (DTAC) jumped 13.92 per cent to Bt45 and True Corp (TRUE) soared 11.11 per cent to Bt3.20.

Foreign investors bought a net Bt3.8 billion of shares, bringing their total net purchases to Bt42.05 billion since the beginning of this year.

Most other major Asian bourses gained on the day. South Korean shares closed 2.30 per cent higher, the benchmark Nikkei225 index moved up almost 2 per cent, the benchmark Hang Seng Index closed up 1.05 per cent and the Straits Times Index of Singapore added 1.05 per cent.

The Shanghai Composite Index, which covers A and B shares, bucked the buoyant trend, losing 0.73 per cent.

Pongrat Ratanataranananda, vice president at Bualuang Securities, said the continuing fund flow and stabilised oil price kept the Thai stock market - dominated by energy stocks at over 30 per cent of overall market capitalisation - on a upward trend.

The absence of negative factor also boosted the stock market's euphoria.

The upside, however, would be limited following the strong rally over the past six months, she warned.

"The SET Index would reach 720-730 points in technical terms. Our house is upgrading the SET target this year from the previous estimate at 680 points," she said.

Among the securities under PTT's umbrella, she recommends investors snap up PTTEP, as its price has yet to reach a new high, unlike its parent and its associated firms.

Pichai Lertsupongkit, senior vice president of Thanachart Securities, took the same line.

The bullishness would continue, thanks to capital inflows, he said.

He could not estimate the overdue steep correction in the Thai stock market at the moment as investor appetite in risk assets is increasing following the emergence of economic recovery signs.

"It's possible to see the stock market plunge around 40-50 points as it has never consolidated in six months," he said.

Montree Sornpaisarn, CEO of Kim Eng Securities (Thailand), said his research house has upgraded the SET target this year to 750 points from 700.

The heavy trading turnover also indicated higher confidence of investors.

Margin loans extended by the country's largest brokerage by market share have risen significantly to Bt2.3 billion, compared with Bt1.3 billion under normal stock market conditions and Bt900 million during bear markets, he said.

Sukit Udomsirikul, assistant managing director of Siam City Research Institute, said the stock market's trek above the 700 level could be ascribed to capital inflows after the US dollar hit a oneyear low.

In the short run, the stock market's effervescence would be extended within a range of 730-680 points.

The local political situation would be a depressing factor, as the red shirts will hold a rally on September 19 and the police chief's resignation raised concerns about a rift in the coalition government, he said.

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