SET to hit 1,300pts, gold to rally to $2,000
The Stock Exchange of Thailand Index could hit 1,300 points following the US's third round of quantitative easing (QE3), said MFC Asset Management.
It is convinced that the index by the end of this year would not fall below 1,220 points, thanks to strong economic fundamentals and positive earning growth.
Chakrit Puechpan, head of domestic equity department at MFC Asset Management, said that his firm earlier target the SET to peak at 1,265 points this year. Thanks to QE3, the index could hit 1,300 points this year and 1,400 points next year.
Still, he pointed out that this would be just a short-term euphoria. In the long term, the market gain would be sustained only by domestic fundamentals. MFC expected listed companies to show average earning growth of 10-12 per cent next year, against 18-20 per cent this year.
"We haven't yet revised the year-end SET target, though. There are some uncertainties, which may spark profit taking later this year. There is an optimism, as investment in bonds has not yet been transferred to the stock market. Meanwhile, investment in LTF (long-term equity fund) late this year should boost the market," he said.
MFC also foresees the likelihood that gold may hit US$2,000 per ounce in the next 12 months due to monetary easing, which encouraged investors to hedge against inflation. Statistically, QE1 led to a 30 per cent spike in gold prices, while QE2 boosted gold prices by 15 per cent. The asset management firm expects QE3 to boost gold prices by 15 per cent.
The metal was traded at US$1,758.57 an ounce yesterday. HSBC Securities say that there is a possibility that it could rally to $1,900 by the year-end.
