Stock volatility anticipated

Nattachart Mekmasin, research manager at the securities house, said that among positive factors is Thailand Focus. Statistics showed that foreign portfolio inflows increased 2-4 weeks after the annual event ended. Meanwhile, domestic consumption remained brisk as farm income hit a 5-year high. Externally, there is a 60-70 per cent chance that the Bank of Japan would announce more measures at the September 20-21 meeting, as Japan's inflation contracted for five consecutive months. A more negative interest rate is anticipated as well as an increase in the quantitative easing scheme. 

On the negative side, the high valuation of the Thai stock market squeezes the earning yield gap. Based on 10-year US Treasury bond yield at 1.58 per cent and the Thai market's perspective earning per share at Bt106.3, the SET Index should have stayed at 1,530 points. Nattachart also urged investors to closely follow US economic indicators which will be released this month.    

"Given the limited upside gain, investors should focus on industries that show continued growth in the second half, including those in the real estate, hire-purchase, tourism, food and electronics sectors," he said.