SET index seen rising through year-end

The Stock Exchange of Thailand (SET) index is expected to continue its rise over the next six months as domestic political stability prevails and the general election scheduled for 2018 inspires economic growth, securities firms say.

There will be greater political stability if next year’s election is held, said Poranee Thongyen, executive vice-president of Asia Plus Securities (ASP).

She said Thailand’s economic recovery remains on a growth path, with full-year GDP growth projected at 3.5%.

“The SET can continue rising over the next three to six months if domestic politics is stable and the economic recovery remains on track,” Mrs Poranee said.

ASP forecasts the SET index to reach 1,620 points this year and 1,650 by next year’s first quarter.

The SET index on Tuesday bucked a regional sell-off trend over geopolitical turbulence in the Korean Peninsula and rose to a two-and-a-half-year high as domestic political uncertainty eased. The SET’s market cap rose from 15.7 trillion to 16 trillion baht, an increase of 300 billion on the day.

The benchmark index eased a bit yesterday, closing at 1,613.34, down 0.05%, in trade worth 55.92 billion baht.

The Thai bourse is identified as one of the laggard stock markets in the region, Mrs Poranee said. The SET rose about 2% in July compared with higher upside gains among regional markets such as Hong Kong (27%), the Philippines (15%), Taiwan (14%) and India (10%).

Thai stock prices remain low compared with regional counterparts, therefore foreign funds have shifted to invest in largecap stocks, Mrs Poranee said.

“We cannot say that the Thai stock market will continue rising strongly, but the SET is a laggard among other [markets] this year after the bourse rose about 19% last year,” she said.

On the global front, if US President Donald Trump is successful in reducing corporate income tax or the European economic recovery turns robust, then these developments will be factors attracting funds back to the West, she said.

Chaiyaporn Nompitakcharoen, executive vice-president of Bualuang Securities, said Thailand’s stock market is expected to continue rising until next week, with equity investment then shifting from large-cap stocks to mid- and small-caps.

“Investment sentiment is quite bullish after markets started to turn their attention away from tensions in the Korean Peninsula,” Mr Chaiyaporn said. “Moreover, the SET also lags behind its regional peers, while Thailand’s economy looks set to recover and domestic politics is quite steady.”

Since the Thai bourse was underweighted earlier this year, domestic stocks are the first destination for fund flows when market sentiment turns positive, he said.

But there could be a sell-off to lock in profit in the near term after the index’s substantial rally of 2.4% during Aug 28-29.

“Small- and mid-cap stocks remain laggards, so domestic investors and some foreign investors will turn to investing in these laggard stocks,” Mr Chaiyaporn said.