The continued buying spree in domestic mutual funds by institutional investors yesterday drove the Stock Exchange of Thailand index to finish the session at 1,752.89 points, edging nearer to the highest close since 1994.
The SET index rose 0.02% on the day in heavy turnover worth 61.5 billion baht. The benchmark climbed at one point to 1,763.36, considered the highest intra-day level in almost 24 years.
The last time the SET index reached an all-time closing high was Jan 4, 1994, when the bourse settled at 1,753.73. The very next day saw an intra-day record high of 1,789.16.
The SET index plunged during the 1997-98 Asian financial crisis, cratering at 214.53 in August 1998.
Institutional investors yesterday were net buyers of 2.24 billion baht worth of shares. On the other hand, retail investors were net sellers of 1.6 billion baht, while foreign investors and brokerage firms sold 515 million and 146 million baht, respectively.
The bullish mood at the Thai exchange was in line with the upward trend of regional stock markets, as Indonesia's Jakarta Composite achieved a record close of 6,277.17, up 0.9%, according to Reuters.
Sharp gains in oil and copper prices helped lift Asian shares broadly.
The SET's rally was led by purchases of large-cap equities in the energy and retail sectors such as GULF (+5.5%), PTTEP (+1.5%), BGRIM (+0.9%) and CPALL (1.6%).
Asia Plus Securities executive vice-president Poranee Thongyen said the latest rally is attributable to heavy year-end purchases of long-term mutual funds and retirement mutual funds to reap a tax benefit.
"Yesterday's trading volume was quite thin, while foreign investors still embarked on buying and selling of shares this week, therefore the possibility of equity sales to take profit early next year still remains, which would cause a downward correction in the SET index," Mrs Poranee said.
The thin trading volume seen among regional stock markets is in line with long seasonal holidays, she said, noting that foreign investors are expected to resume share purchases in February and March.
SET president Kesara Manchusree said the main index drawing near to an all-time closing high is an occurrence that should have happened a long time ago, as various regional stock markets have recorded new all-time highs since the 1997 crisis.
"We are not concerned about the heat surrounding this rally, because the stock market's fundamentals have grown five times compared with those on Jan 4, 1994, when the SET index closed at 1,753.73 points," Mrs Kesara said.
The bourse's market capitalisation has increased by more than five times to 17.5 trillion baht from 3.3 trillion nearly 24 years ago, she said, adding that daily average trading volume stands at about 50 billion baht, up from volume worth several billions of baht in 1994.
Listed companies on the SET and the Market for Alternative Investment total 688, up from 220 a decade ago and doubling during the 24-year period, Mrs Kesara said.
The stock market's price-to-earnings ratio of 15 times is not considered low, but such a P/E ratio is much lower than the ratio registered in 1994, she said.
The current turnover ratio of 70% is also lower than the ratio of more than 100% when the bourse hit its all-time high in 1994, she added.
"These figures indicate how investors expect listed firms' earnings growth to improve, since the stock market is a mirror reflecting investors' future expectations," Mrs Kesara said.
The share prices of several equities have broken their previous record highs, and therefore investors should study the basic fundamentals of each listed firm when making their investment decisions, she said.
