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Good earnings boost fund inflow, SET prospects

The Stock Exchange of Thailand Index is expected by some analysts to close the year at 1,200 points thanks to the rosy outlook for listed companies’ earnings – a factor that continues to attract foreign funds and which helped pull the SET out of negative territory yesterday.Bucking the regional trend and despite a loss earlier in the day, the SET Index managed to gain 5.21 points or 0.48 per cent to close at 1,095.88 points on turnover of Bt37.3 billion.

Foreign investors remained net buyers, with purchases exceeding sales by Bt144.53 million. Their aggregate net-buy positions this month have now reached Bt19.9 billion.

Elsewhere, Asian markets plunged as investors were spooked by Standard & Poor’s first-ever downgrade of its US sovereign-debt outlook, from stable to negative.

The ratings agency said it could not foresee any deal between Democrats and Republicans on cutting the US fiscal deficit until after the November 2012 presidential and congressional polls, and that without such an agreement, the problem would only worsen. The budget gap is expected to be almost 11 per cent of gross domestic product by the end of the year.

Without any action, S&P warned that within two years it could cut the US rating for the first time, which would send Washington’s debt costs sharply higher.

Kongkiat Opaswongkarn, CEO of Asia Plus Securities, said fund flows into the Kingdom would largely benefit energy and banking stocks, as their fundamentals improve on the back on higher oil prices and interest rates.

CIMB Securities (Thailand) maintains the expectation that the SET Index will end the year at 1,200 points, thanks to estimated corporate earnings growth of 10-15 per cent and more stable political conditions.

Meanwhile, an analyst at Finansia Syrus Securities expects market volatility to continue, due to profit-taking and the absence of good news.

Capital inflows have led to the baht’s further appreciation against the US dollar, aside from the Monetary Policy Committee’s expected policy-rate hike today.

The baht had added 0.1 percentage point to 30.09 per dollar as of 3.36pm in Bangkok yesterday, at one point reaching 30.07, the strongest level since April 12, according to data compiled by Bloomberg.

A research house says the currency could rise to 29.60 by the end of June, and 29.20 by year-end.

Meanwhile, according to filings to the Securities and Exchange Commission, foreign investors are building up their stakes in Thai listed companies, in line with the renewed capital inflow.

Franklin Templeton Investment Funds has increased its holding in Kasikornbank to 4.99 per cent, having on April 12 acquired shares accounting for 0.01 per cent of the bank’s registered capital.

In another deal, Golden Rock Properties built up its stake in Golden Land Property Development to 10.342 per cent through an equity conversion.

Meanwhile, just as Thai Rayon announced a planned major expansion into Sweden, the company welcomed Oneida Services as a new major shareholder. Following a transaction on April 12, Oneida owns 10.71 per cent of company.

A further deal concerns the acquisition of a 0.25-per-cent stake in Sino-Thai Engineering and Construction by Amundi Singapore, Amundi Hong Kong and Amundi Luxembourg. The foreign investors now own 5.05 per cent of the company.

Source: The Nation

ThaiVest Editorial Team