MFC Asset Management remains broadly optimistic about the Thai stock market, seeing the index as likely to reach 650 points in the short term if the US economy shows further signs of improvement.
MFC executives toast the launch yesterday of MFC-Strategic Storage Fund on the SET. The 608-million-baht property fund will invest in cold storage and warehouse assets.
While the SET index has already exceeded the company's target for the year of 587 points, further gains are possible thanks to pent-up demand from local funds, said senior executive vice-president Supakorn Soontornkit.
"There remains unfulfilled demand from large institutional investors. Whether it is the Government Pension Fund, the Social Security Fund or insurers, many companies are still underweight on the market," he said.
The SET index yesterday closed at 643.02 points, down 0.73, in trade worth 17.36 billion baht.
The index fell as low as 637.3 points in morning trade before picking up in the afternoon.
Dr Supakorn said the index fell on market concerns about the Chinese authorities tightening monetary policy to ease growth. Chinese A-shares have rocketed by 80% for the year-to-date, with H-shares in Hong Kong up some 40%.
China's economy is expected to continue to lead the region, he said.
"With strong domestic demand from its billion-plus population, and new spending on infrastructure, we do not see a hard landing for the Chinese economy. [Tighter] monetary policy will only be a touch on the brakes," said Dr Supakorn.
MFC currently maintains a 30% overweight rating for the Chinese market in its foreign investment funds, above the benchmark of 20%.
For the Thai market, up 43% for the year to date, MFC maintains a full-investment policy for its equity funds, and an above-average rating for its flexible funds.
"But you need to monitor trends closely, and sometimes switch sectors to defensive stocks when the market turns bullish," said Dr Supakorn.
Weaker-than-expected US economic data could push the index to test 600 points in the near term, he said.
In any case, further gains should ensue next year, as earnings growth for listed companies hits double digits due to a low base this year.
MFC yesterday launched its MFC-Strategic Storage Fund on the SET. The 608-million-baht property fund will invest in cold storage and warehouse assets in Ayutthaya, Samut Sakhon and Bangkok belonging to Agri World Co, Northern Agricultural Co, P.P. Foods Supply Co and Siam Nippon Engineering Parts Co.
Units of M-STOR closed yesterday on the SET at 10.5 baht in thin trade. Par value for the fund is 10 baht per unit.