Thai index climbs on hope for solution

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Thai index climbs on hope for solution 
Bangkok Post: 5 May 2010
Stocks climb 4.37% on hope for solution

Thai stocks jumped by 4.37% yesterday as investors welcomed signs that the conflict between the government and red-shirt protesters could be coming to an end.

Sompol: Positive reaction to roadmap

The Stock Exchange of Thailand index surged by 25 points from the start of trade, and rose as high as 798.67 before settling at 796.86 points, up 33.35. Volume was heavy at 41.7 billion baht worth of shares trading hands.

Winners outweighed losers 355 to 49, with 66 stocks closing unchanged. Energy stocks rose by 4.28%, banks gained 6.11% and property stocks climbed 5.54%.

The SET index, which prior to yesterday's rally had been up a modest 3.94% for the year to date, has largely lagged the region due to the political unrest and violence of the past month.

But late Monday, Prime Minister Abhisit Vejajiva floated a five-point "reconciliation roadmap" in a national TV broadcast, including an offer to hold new elections in mid-November. Leaders of the red-shirt United Front for Democracy against Dictatorship yesterday made initial signs that they would accept the compromise and break up their encampment at the Ratchaprasong intersection.

SET chairman Sompol Kiatphaibool said the sharp bounce in share prices pointed to the positive reaction of investors to the government's offer.

"The economic fundamentals are strong, with exports, agribusiness and industry all performing well. Without political risk, there would be no concerns at all, and investment would significantly increase," he said.

Mr Sompol said the SET's gains came despite general weakness in the regional market. Most Asian markets yesterday closed lower on investor concerns that new Chinese measures to curb the soaring property market would hurt growth.

Shanghai stocks fell 1.23% yesterday, Hong Kong dropped 0.23% and Sydney lost 1.01%.

Mr Sompol said he expected that the move towards early elections would result in delays for the SET's own demutualisation and restructuring plan.

Paiboon Nalinthrangkurn, chief executive officer of Tisco Securities, said that while the compromise solution was positive for short-term sentiment, volatility and uncertainty remained high.

He said investors should monitor closely not only whether the red-shirts accepted the five-point reconciliation programme, but also if other government coalition members accepted the compromise.

In any case, the SET index could well exceed 800 points within the next several sessions, supported by ample market liquidity and favourable economic and corporate fundamentals, Mr Paiboon said.

Win Udomrachtavanich, chief investment officer at Asset Plus Fund Management, said the decline in political risk opened the door for a sharp revaluation of Thai stocks.

"Most sectors have posted good earnings growth for the first quarter. The SET is ready for a jump if and when the political tensions decline," Dr Win said.

He estimated the political discount on share prices at 20% to 30%, meaning the index could rise to as much as 850 points if the conflicts truly end.[/color=blue]

But Dr Win added that the index could post a short-term correction on Thursday if the red-shirts refuse to vacate the Ratchaprasong intersection. The market is closed today for Coronation Day.

Thanachart Securities is even more optimistic, viewing the SET index possibly reaching 850 points in the short-term and 950 points by the end of the year.

PTT Plc was the most active stock yesterday, gaining 12 baht to 269, while PTT Exploration and Production rose 5.5 to 157.5 baht and Siam Commercial Bank jumped 6.5 baht to 88.5 baht.

http://www.bangkokpost.com/business/economics/36823/stocks-climb-4-37-on-hope-for-solution