liquidity:SET likely to keep top ranking

The SET last year performed well and was able to withstand much turbulence, including the sovereign-debt crisis in Europe, the political crisis in the Middle East and North Africa, the earthquake and tsunami in Japan, a weak US economy and the severe flooding in the Kingdom, he said.

The SET Index closed the year at 1,025.32 points, down just 0.72 per cent from the year before, comparing favourably with a significant downturn in the MSCI Emerging Market Index, which shed 20 per cent, and stock markets in developed countries, which fell by 7.61 per cent over the year.

The Thai bourse had the highest liquidity in Southeast Asia, as late last year turnover rose to 70 per cent of market capitalisation and yearly trading value, compared with 50 per cent in Singapore and 30 per cent in Malaysia, said Veerathai.

This was because Thai investors accounted for 55 per cent of overall market investors, and therefore boosted share-buying when there were negative factors discouraging equity purchases. When foreign investors sold shares on the SET, local investors were willing to buy, he added.

"This trend is likely to continue this year as local investors still play an important role in the market, while government fiscal expansion policy and the corporate tax cut will boost the economy and the stock market, he said.

Moreover, as the US economy is showing signs of recovery, investors have started to return to stock markets after turning last year to less-risky assets. Over the first 10 days of the new year, the SET Index rose by 2.7 per cent, while stock markets in the Philippines and China increased by 4.3 per cent and 4 per cent, respectively, and the Dow Jones was up 2.3 per cent.

Foreign investors are also interested in the Thai market as they perceive the economy will be driven by domestic consumption and investment, he said.

However, it is difficult to predict how the market will perform this year due to many factors, such as the debt crisis in Europe and the presidential election in France in April, the outcome of which will affect debt management in the euro zone. The US presidential election in November will also affect economy policy in that country, he said.

As to domestic factors, Veerathai said investors were anxiously awaiting the government’s flood-prevention measures, set to be unveiled this Saturday. They are also awaiting news on the government measure to collect premiums from financial institutions, especially in regard to how it would affect banks’ share prices.

They also expect more investment in 3G (third generation) mobile-phone networks.

Veerathai said the SET last year had reached its highest level in 15 years, hitting 1,144.14 points on August 1.

Meanwhile, the main board’s market capitalisation reached Bt9.36 trillion, while that of the Market for Alternative Investment (MAI) increased to Bt86 billion.

Daily average trading was worth Bt29.47 billion, which was the highest on record and second only to the level on the Singapore exchange.

The price/earnings ratio was 12.3 times at year-end, down from 14.7 a year earlier.

Dividend yields rose by 4.03 per cent on average, up from 3.56 per cent the year before and retaining third place in terms of the best returns in the region, behind first-placed Taiwan and Singapore. The average dividend yield on the MAI was 2.57 per cent.

Derivatives trading increased sharply, reaching 10,027,116 contracts, or 41,145 per day, up 120.3 per cent from 2010. Trading in gold futures and SET50 Index futures also increased.