INVESTING / FOREIGN BUSINESS ACT : Market continues to revive as FBA worries ebb

INVESTING / FOREIGN BUSINESS ACT : Market continues to revive as FBA worries ebb.

NUNTAWUN POLKUAMDEE

The Stock Exchange of Thailand gained 1.27% yesterday on improved investor confidence on eased concerns about the impact that changes to the Foreign Business Act would have on foreign joint ventures.

The SET index closed at 645.71 points, up 8.08 points, in trade worth 18.91 billion baht, with activity primarily focused on large-cap stocks in the banking and energy sectors.

Foreign investors were net buyers of 3.81 billion baht worth of securities, with retail investors net sellers of 2.34 billion and local institutions net sellers of 1.48 billion.

Analysts warned, however, that medium -term prospects remained clouded, with the index possibly moving in a broad range between 520 and 720 points.

Key risks include local political and security uncertainties, the upcoming court case on the legality of PTT Plc's 2001 privatisation and market listing, and the planned general election later this year.

Paiboon Nalinthrangkurn, a managing director at Tisco Securities, said risks to investors remained quite high given the lack of clarity over domestic politics.

A recent downweighting of the Thai market by the influential Morgan Stanley Capital International (MSCI) index has also led foreign funds throughout the world to downsize their allocations to the Thai market.

Mr Paiboon, speaking at a seminar on investment trends at the SET yesterday, said other foreign investors more knowledgeable about the Thai market were maintaining positions in local stocks, but for shorter periods and with greater willingness to sell off shares on new developments.

''Over the next six months, the risks remain high. In March and April, the courts will consider the election fraud case against the Democrat and Thai Rak Thai parties, as well as the legality of PTT's listing on the SET,'' he said.

''Uncertainties about the constitutional reform process and the timing of the next elections are other risks. We could see the index drop to below 600, or on the other hand, extend gains if the situation clarifies.''

Tisco recently cut its year-end target for the SET index to 730 from 780 points. It said corporate earnings growth was also expected to drop to a range of 6% to 7% growth, down from 7% to 8% previously.

Somchai Gawsawadikul, an international equity sales executive at Asia Plus Securities, said the past week had featured an increase in buy orders from foreign institutions, viewing that current valuations offered strong profit opportunities for the future.

He said expectations of an interest-rate reduction this coming Wednesday were also helping boost sentiment, and that the index in the latter half of the year should post gains driven by local buying.

Bangkok Post
Sunday January 14, 2007