$3-bn flood-recovery gain seen for SET

“Thailand’s capital market is one of the interesting places among emerging markets in Asia after passing the devastating flood late last year. The government is also injecting money to boost the economy and interest rate cuts will make Bangkok more attractive,” Paiboon Nalin-thrangkurn, chairman of the Federa-tion of Thai Capital Market Organi-sations, said yesterday.
Much of the foreign investment would go to the bond market, he told a  seminar on “Fund Flows: Global Investment Opportunities” hosted by Tisco Securities and Krungthep Turakij newspaper, where the consensus among economists was that the Thai market would be more appealing to foreign investors than last year.
Paiboon said the increase in fund inflows reflected the signs of improved recovery, particularly in the US. This will encourage the shift of funds into Asian markets including Thailand, where economic growth is higher than in developed countries.
Fund flows to the Thai bourse have reached $1.5 billion or Bt45 billion in the first two months this year, which is a record compared with the average of Bt30 billion-Bt40 billion per year.
Paiboon, who is also managing director of Tisco, said $3 billion could flood the Thai bourse – equal to what Indonesia received last year. However, those investing in Indonesia will gradually move their portfolios out, after the market there outperformed for five years, to other attractive markets.
“It is believed that those funds will flow into Thailand as the two countries [Thailand and Indonesia] have been ranked at the same level,” he said.
However, some $200 million had flown out of Thailand after it was hit by the flood.
The huge inflow of funds would help push the Stock Exchange of Thailand Index over 1,200 points. However, the market would face consolidation sometimes.
Kampon Adireksombat, a senior Tisco economist, said the forecasts for this year were for the economy to expand by 5 per cent, inflation to stay at 3 per cent and the currency to hover at Bt30-Bt31 against the dollar. Positive factors include exports, pro-spending government polices, such as hiking the minimum labour wage and starting salary, and public investment. The huge investment of Bt350 billion to build floodwalls and Bt50 billion to set up the Disaster Insurance Pro-motion Fund as well as domestic consumption will also help boost the economy.
Thailand’s GDP growth path will be buffeted by rising fuel prices, which will drive up inflation. Local prices have gone up by 15 per cent since early this year in line with Dubai crude oil and the global economic recovery.
“Oil prices are predicted to increase further [because of tensions over Iran]. Every 10-per-cent increase in Dubai crude oil will affect Thailand’s inflation by 50 basis points,” he said.
Chodechai Suwanaporn, executive vice president of PTT, said energy prices are expected to increase over the next five years because of low global oil reserves,  and the lack of other alternative energy sources in the short term, such as wind, solar, biogas and biomass, especially for transportation.
Oil is expected to increase gradually by $5-$10 per barrel depending on supply and demand at any particular point of time. However, when there is fear or high concern in the world, oil will shoot up by $20-$40 per barrel.
Oil once touched $150 per barrel. Now many people are worried that oil will rise to the peak level again if a war breaks out over Iran. Global oil prices are already steep, he added.
Boonlert Siripataravanich, CEO of Ausiris Gold Trading, said the price of gold bars is also expected to increase to Bt30,000 per baht weight (15.24 grams) or about $2,200 per ounce because of the tendency of the central bank to stock up on the precious metal. It bought about 400 tonnes of gold last year. In the past, the central banks of some countries turned to keeping gold as their reserves.
Wanchak Buranasiri, chief operating officer of Sansiri, said property prices would rise this year despite the huge concern of consumers of the possibility of flooding.