Thai bourse rises 1.55 per cent after referendum on constitution
THE STOCK Exchange of Thailand yesterday responded positively to the approval of the draft charter in Sunday’s referendum, resulting in an influx of fund flows thanks to investors’ confidence.
SET yesterday recorded the highest market capitalisation of Bt14.95 trillion.
However, brokerage firms warned that the fund inflows – considered “hot money” – could revert to the developed-country stock markets if the US federal funds rate is raised by the end of this year.
The SET Index yesterday rose 23.57 points or 1.55 per cent to close at 1,542.26.
Yesterday’s turnover was Bt76.29 billion with foreign net-buys of Bt6.89 billion. At the opening, the index surged 20.08 points or 1.32 per cent. Most trading volumes were stocks in the banking, telecom and communication, and energy sectors.
The Federation of Thai Capital Market Organisations yesterday also revealed that its Investors’ Index had risen by 23.31 per cent, entering the “bullish” range for the first time in 20 months, after the influx of foreign capital funds.
SET president Kesara Manchusree said bourse had no immediate need to exercise any measures in response to the fund inflows.
Tisco Securities noted in a comment sent to The Nation that the “yes” vote on the draft charter would be positive for market sentiment, as it would mark a clear step towards the return of democracy in Thailand.
In its view, a “no” vote would almost certainly have caused the market to retract, as it would have increased political uncertainty and raised concerns about fresh delays in the election timetable.
Foreign investors have bought more than Bt80 billion net of Thai shares since the beginning of this year.
Speaking at a seminar on the SET’s outlook after the referendum, Padermpob Songkroh, managing director for equity wealth management at Kasikorn Securities, said politics was not a factor that had a long-term impact on the Thai stock market.
He said the SET Index would move along with the country’s economic recovery. Although the main factor boosting the index this time was the fund inflows, he did not believe much of it would be dumped until the election, expected to take place in December next year.
Over the past few years, the SET recorded a net foreign sell of Bt380 billion.
Padermpob was also concerned over the slower-than-expected recovery of global economies, while the likely increase in the US federal funds rate this year was meaningful.
He said this month should be a period of correction and in terms of valuation, Thai stocks on average were considered expensive, with a price-per-earnings ratio of 16.5 times. Based on Kasikorn Securities’ estimated earnings of Bt94 each for next year, the P/E ratio would be around 15 times.
“We maintain our target for the SET Index this year at 1,530 points, given that listed companies’ performance in the second and third quarters was less than expected, compared with the same periods last year.”
Trinity Securities’ latest analysis pointed out that the Thai bourse was possibly at risk if the US federal funds rate were raised in December.
“The push of the fund inflows will be softer, as the world’s major central banks are tapering their money-easing policies,” said Trinity Securities, adding that the SET Index – based on an average of estimated earnings per share of Bt105.83 – was expected to stand at 1,522 points next year.
