SET forecast to hit 1,700 this year

Thai shares are expected to extend their rally to hit 1,700 points by the end of this year, buoyed by persistent offshore fund inflows with the hope of picking up both capital gains and a profit windfall from the firmer baht and strong economic growth, SCB Securities (SCBS) forecasts.

Despite the steep gain, the benchmark SET index lags other bourses in the region, with the MSCI Asia ex-Japan surging 20-25% this year, well above the 6% increase of the Thai stock exchange, said Isara Ordeedolchest, vice-president of the research group’s investment strategy department.

“The SET still lags other markets in Asia, but those strong economic readings will cause it to keep rising and hit an all-time high soon,” he said.

SCBS is upbeat on the SET index, predicting it will reach 1,800 points next year.

The SET recently jumped to a 24-year high on an influx of capital, while the baht has gained more than 8% against the greenback — the best performing currency in Asia.

The SET index eked out a small gain of 0.09% to close at 1,660.53 points on Friday in brisk trade worth 70.1 billion baht.

Thai shares’ intraday historic record high stands at 1,753 points.

Mr Isara said the current fund inflows to the SET are not hot money as foreign investors are expected to hold Thai shares for an extended period to profit from capital gains and currency arbitrage. Foreign investors still park their money in the market but rotate to laggard stocks as they have a positive outlook for the Thai market.

“The SET clearly has been in an uptrend direction, the situation that investors have long been waiting for is nearly coming true,” he said.

“They want to see investment in infrastructure projects kick off. Infrastructure investment is essential for Thailand’s economic growth and long-term competitive edge in trade over the long-term,” said Mr Isara.

“Investors now aren’t worrying about politics, while the government can invest in megaprojects in line with the road map. These projects are viewed as winners. No matter which political party forms the [next] government, the economic policy will be unchanged and capital market investors are confident.”