The Stock Exchange of Thailand (SET) index yesterday was on the verge of breaking 1,700 points as it continued its rally with heavy fund inflows, attributed to jubilant investor confidence buoyed by Thailand's economic recovery.
The Thai bourse closed at 1,688.64 points, up 0.93%, in heavy turnover worth 62 billion baht. The SET climbed to 1,691.13 points at one point yesterday -- the highest level in almost 24 years.
The last time the SET index climbed such highs was in Jan 1994, when the bourse rose to 1,753.73 points before tumbling 214.53 points during the 1997-98 Asian financial crisis.
Foreign investors were the highest net buyers at 2.86 billion baht, followed by institutional investors at 1.05 billion and brokerage firms at 687 million, while retail investors sold 4.5 billion worth of shares.
Heavy turnover on the Thai bourse was in line with the upward trend of regional stock markets, with Singapore's Straits Times index gaining the most in the region -- up 1.31%.
The SET's rally was led by purchases of large-cap equities in the energy, retail, and banking sectors, such as PTT (+2.45%), IRPC (+2.38%), CPALL (+1.87%) and SCB (+1.31%).
Terdsak Taweethiratham, senior executive vice-president at Asia Plus Securities (ASP), said continuous fund inflows into the SET were attributable to several factors.
China's manufacturing activity in September grew at its fastest pace since 2012, as factories cranked up output to take advantage of strong demand and high prices. A Bank of Japan survey also showed big manufacturers in that country had more confidence in business conditions thanks to a weak yen and the global economic recovery.
Investor confidence in the Thai bourse has seen a further boost after uplifting economic data in the first half and an upward revision of the full-year GDP growth outlook, he said.
The Bank of Thailand recently revised its economic growth forecast for this year to 3.8% from 3.5%, while next year's growth forecast was also given a nudge to 3.8% from 3.7%.
Another factor supporting buoyant confidence is how the SET's market valuation remains inexpensive, even as the SET index had risen more than 100 points over the past two months, as the price-to-earnings ratio remains around 15-16 times, lower than that of regional markets, said Mr Terdsak.
It is expected that fund inflows into the Thai bourse will continue until year-end and the SET index will reach ASP's target this year of 1,700 points, he said.
Pragrom Pathamboarm, senior vice-president at KGI Securities, said investors have increased holdings of Thai equities on the back of Thailand's sanguine economic figures.
Key factors driving market confidence include a 13.2% year-on-year rise in Thai exports in August and better than expected data for private consumption and private investment, he said.
Investors are banking on Thailand's economic growth prospects in the final quarter, as seen from the rise in retail stocks, said Wijit Arayapisit, a strategist at Maybank Kim Eng Securities Thailand (MBKEST).
China's Golden Week, which has supported brisk tourism in Thailand, and investors expectation that earnings per share of SET-listed companies in 2018 will be better are supporting factors for yesterday's brisk trading on the SET, he said.
MBKEST forecasts the SET index's year-end target at 1,712 points for the resistance level and 1,668 points as the mark for support level.
