Construction stocks driving SET rise, survey
Construction stocks, which are expected to show the fastest growth in earnings per share (EPS), will be a prime force behind the Stock Exchange of Thailand's dramatic march towards 1,471 points this year, according to a December 12 survey.
"This is based on the economic growth forecast of 4.6 per cent, continued rise in earnings growth thanks to the corporate-tax cut to 20 per cent, and further cuts in the policy rate," Sombat Narawutthichai, secretary-general of the Securities Analysts Association, said yesterday.
Analysts polled by the association predict another bright year for the SET this year after the latest year-end target of 1,471 came out higher than the June 5 survey, when the consensus was 1,378.
Analysts from 22 brokerages participated in the latest survey, which indicated 1,245 points for the lowest estimate for 2013 and 1,537 for the highest.
The construction sector’s EPS growth is expected to hit 32.17 per cent, leaving the property sector behind with 18.44 per cent and banking with 18.37 per cent. Communication stocks are expected to show the highest dividend yield of 5.50 per cent, followed by electronics parts with 5.08 per cent and energy with 4.34 per cent.
The SET target assumes that the United States will not go over the cliff represented by tax increases and spending cuts next month. Success in addressing the fiscal cliff would lead to more foreign capital flowing to the SET. Net stock investment by foreign and institutional investors next year is expected to reach Bt32 billion.
Most analysts look for 15.2-per-cent growth in listed companies’ 2013 earnings.
While earnings growth is top of the positive factors besides the cut in corporate income tax, a lowering of the policy interest rate and successful avoidance of the fiscal cliff in the US, analysts highlight domestic political instability as the biggest risk. Other negative factors are the euro-zone crisis and the fragile US recovery.
Amid the challenges, 60 per cent of the respondents urged the Bank of Thailand to cut the policy rate by 25-50 basis points next year, while 30 per cent are satisfied with the current 2.75-per-cent rate. Only 5 per cent propose that the central bank raise the rate by 50 basis points.
About 87 per cent want the government to speed up mega-project investment to help boost the domestic economy, while 6.5 per cent hope the government scraps some policies such as the rice-pledging scheme or stops launching any new measures altogether.
