Monday, October 29, 2007

Thaland's stock exchange lifted to new high with oil prices

Oil prices help lift SET to 11-year high

Foreigners continue buying Thai stocks


Thai shares jumped 2.29% to the Stock Exchange of Thailand index's highest close in 11 years on the back of foreign fund flows and rising global oil prices.

The index closed at 915.03 points, up 20.46 points, in trade worth 24.39 billion baht. The combined trade in just three major energy stocks _ PTT, PTTEP and Thai Oil _ was 10 billion baht, or 41% of the entire market turnover.

Foreign investors were net buyers of 1.99 billion baht worth of securities, while retail investors were net sellers of 1.65 billion baht and local institutions sold another 346.77 million baht.

Marco Sucharitkul, the president of JPMorgan Securities (Thailand), said the big rise in energy stocks led the market's gains. The majority state-owned energy firm PTT alone drove the SET index up by 10 points.

''The global market rallied as global oil prices have increased sharply,'' he said. ''That's why stock markets around the world moved up strongly. It is widely speculated that oil prices will hike to US$100 per barrel within this year and energy stocks will rise further.''

Kitti Hamnilrat, a senior analyst at Ayudhya Securities, said steady foreign fund flows into Asia had also lifted major Asian stock markets, including Thailand.

''Investors expect that the US Federal Reserve will cut the fed funds rate by another 25 basis points at its meeting [to 4.5%]. That's why foreign fund managers have been shifting their money to invest in Asian stocks,'' he said.

The result of the two-day Fed meeting is scheduled to be announced around 2 am Thursday Thailand time.

For the Thai market, Mr Marco said energy stocks had very high prices. So some investors will move to other sectors, especially banking, which has featured high liquidity and better-than-expected performances in the third quarter.

However, banking stocks still have some risks related to the lingering sub-prime crisis in the US.

Mr Marco said the stock market might see some minor corrections before the Dec 23 election after soaring during the past few weeks.

''We have set the SET index target at 945 points by the year-end. If the foreign funds continue to flow into the local exchange like this, we can see the index hit the target over the next few days,'' he said.

Banpu Plc, the cheapest among the energy stocks, jumped 8.46% to 460 baht. The company has recently faced complaints about environmental problems at some overseas mines.

Patareeya Benjapolchai, the SET president, said the bourse hoped to see Esso and Star Refinery list by the end of this year. If possible, the two oil companies should submit their listing proposals before Dec 31 so they can enjoy tax incentives, she said.

As the general election approaches, the SET plans to closely monitor some politically influenced stocks. Some exchange officials fear that politicians may dominate trading of some stocks to raise funds for the election campaign.

''We haven't found any unusual trading of any stock,'' Mrs Patareeya said. ''The market has moved in line with the regional and global direction, which was influenced by foreign funds.''

The SET chief predicted that the market would move forward as investors expected the quarterly earnings of energy companies to improve on the back of higher oil prices.

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