Telecom, construction sectors take SET
to 12-month high; baht hits 5-year peak
Celebrating Prime Minister Thaksin Shinawatra’s huge electoral mandate, Thai stocks rallied to their highest in a year yesterday with a big boost from some telecom stocks and the construction sector, while the baht appreciated to near a five-year high.
Thaksin-founded Shin Corporation Plc soared 2.75 per cent to Bt46.75, while overall the market rose 0.93 per cent to 725.76 points. Shin subsidiary Advanced Info Service gained 2.68 per cent to Bt115, while the telecom sector as whole increased 2.14 per cent.
The construction sector, which is expected to gain from the Thai Rak Thai-led government’s mega infrastructure projects, also gained 1.5 per cent yesterday. Both Italian-Thai Development Plc and Sino-Thai Engineering & Construction Plc rose by 3.36 per cent to Bt12.30.
The baht yesterday appreciated above a key resistance point at Bt38.25 per dollar to stand at Bt38.17 in the afternoon session, a level not seen since May 2000, due mainly to the Thai Rak Thai’s landslide victory in Sunday’s general election, dealers said. The Thai currency closed at Bt38.245 in Asian trading.
ABN Amro Bank earlier predicted that the baht could be strengthen to Bt36 a dollar by the end of the year.
However, the bond market barely reacted to Thaksin’s victory, which dealers said investors had expected. They also foresaw no change in monetary policy. Government bond yields were largely steady yesterday, but yields on the long end eased by 3-5 basis points, helping flatten the curve.
“The yield curve has been flattening since late last week on continued demand for long-dated bonds, especially 10-year issues,” a dealer at a domestic bank was quoted by Reuters as saying.
Bualuang Securities assistant vice president Padermpob Songkroh expected that stocks of construction and telecommunications firms and credit-card issuers would benefit from the Thai Rak Thai victory.
Building firms would benefit from the ruling party’s promise to construct five new subway routes across Bangkok over the next 3-6 years, faster than the previous schedule of 3-20 years, he said.
He added that the government would support strong domestic consumption and this would be a boon to credit-card issuers and consumer finance firms.
Kongkiat Opaswongkarn, chief executive of Asia Plus Securities Plc, commented that the market could expect further inflow of foreign investment due to the government’s strong mandate. But he called for more measures to assist business operators besides financial assistance and tax privileges.
“Foreign investors still have a good view of the Thai stock market as the election result is in line with their expectations. But the stock index will reflect that positive view only in the short term. If the government can achieve economic management, the market will be bullish in the long term,” he said.
Kongkiat also suggested that the government provide ways for low-income earners to increase their earnings to counter rising household debt, which he said could be a risk to the country if it did not drop.
With price-earnings ratio of 11 times, the Thai stock market is still attractive, he said. His company will not yet raise its target for the SET index this year from 800 points as it had already factored in strong confidence in the new government and a continuation of economic policies.
“Privatisation is an important thing for the government to implement, as the capital market should be enlarged to draw foreign funds,” he said.
Kim Eng Securities (Thailand) also commented that the positive effect of the election result was the continuation of economic policies and privatisation. However, it warned that there would be more speculation in the stock market as the SET index had risen by as much as 30 per cent since August, when it stood at 588.
Published on Feb 07 , 2005