The Stock Exchange of Thailand index bucked yesterday's regional sell-off trend and rose to a two-and-a-half-year high as domestic political uncertainty eased.
The SET index closed at 1,614.14 points, up 1.8%, in trade worth 95.65 billion baht. The SET's market cap rose from 15.7 trillion to 16 trillion baht, an increase of 300 billion in a day.
Institutional investors were the highest net buyers at 5.24 billion baht, followed by 4.82 billion and 2.3 billion for foreign investors and brokerage firms, respectively. Retail investors were net sellers of 12.37 billion baht.
Heavy turnover in the Thai bourse marked a stark contrast with a plunge in regional stock markets as investor confidence tumbled over geopolitical turbulence related to North Korea's missile launch and a mutual vow to increase pressure on the pariah regime by US President Donald Trump and Japanese Prime Minister Shinzo Abe.
The Philippine Stock Exchange Composite closed at 7,948.39 points, down 0.8%, while Singapore's Straits Times index closed at 3,249.34 points, down 0.6%. Besides the SET, China's Shanghai SE Composite was the only regional stock gauge moving in a positive direction, closing at 3,365.23 points, up 0.08%.
As tensions on the Korean Peninsula have intensified, investment funds have shifted into safe-haven assets, as indicated by a rally in global gold prices. Bullion for immediate delivery gained as much as 0.9% to US$1,322.41 (43,851 baht) an ounce, the highest intraday price since Nov 9, according to Bloomberg.
Return of confidence
KTB Securities chief executive Win Udomrachtavanich said domestic political uncertainty has eased after the Supreme Court's verdict on the contentious rice-pledging scheme last week, with no indication of a political conflict escalating into violence. As a result, local investors have resumed equity investment.
The SET index has moved closer to the brokerage firm's index target of 1,650 points for the year, based on market performance, while a market correction is expected as the index edges closer to the forecast target, Mr Win said.
"We don't know when the domestic political issue will end, but there is greater stability expected, [while] global politics remains a concern warranting a close watch," he said.
Thai stock fundamentals and performance, however, remain unchanged, warranting further close monitoring of future political developments, Mr Win said.
He said the plunge in global stock markets yesterday was due to rising geopolitical tensions after North Korea's missile launch over northern Japan, prompting foreign investors to adjust their investment portfolios from high-risk assets into gold, a safe-haven investment.
Foreign investors make up a small portion of trade in the Thai bourse, therefore reaction on global geopolitical developments has been minimal compared with other markets, Mr Win said.
Local investors have resumed trading this week as domestic political concern eases temporarily, but it is a different story for global stock markets because of the heightening geopolitical conflict over North Korea, said SET president Kesara Manchusree.
"The SET today is different than other regional markets, as we deal with different problems," Mrs Kesara said. "Thailand's stock market is currently driven by local investors and we are resilient compared with other markets."
The Thai bourse still has further growth potential, with listed firms expecting to log revenue and profit growth in the second half, while dividend yields remain attractive compared with other regional bourses, she said.
"Amid global economic volatility, the fundamentals of Thailand's listed firms remain strong, proven by their growing performance and the rise of dividend payments in this year's first half compared with the same period last year," Mrs Kesara said.
The SET, Phatra Securities and Bank of America Merrill Lynch yesterday held Thailand Focus 2017, a flagship investment seminar running Aug 29-31.
Test of patience
Yesterday's sharp rise in the local stock market was attributed to easing concerns over potential turmoil stemming from Yingluck Shinawatra's court case, said Prinn Panitchpakdi, managing director of CLSA Securities Thailand.
CLSA Securities is still maintaining its SET index target of 1,650 at year-end. Foreign investors have underweighted the Thai stock market over the past few years, so they are expected to return to a stable domestic environment with revenue growth at listed firms, Mr Prinn said, noting that consumer, tourism and construction are sectors with strong growth potential.
Global geopolitical tensions are not expected to escalate into full-scale conflicts, as the collateral damage could be overwhelming, he said, adding that North Korea's recent missile launch could be a test of patience for Japan and other countries.
Patchanee Limapichat, president of Phatra Securities, said the firm is maintaining its year-end SET index target of 1,600 points, implying a limited upside gain from its current view of 1,567.52 points.
In light of the gradual recovery of the global economy and low inflation, gradual tightening of worldwide monetary policy offers more potential inflow into emerging markets, including Thai equities, Ms Patchanee said.
Despite volatility in global economies and financial markets, Thai listed companies remain resilient because of their strong balance sheets, she said, adding that Thailand's economy continues to expand steadily on the back of a strong recovery in exports of goods and services.
Gold rush
While a lot of attention is fixed on stocks, spot gold prices and local gold prices also hit 2017 highs yesterday as investors flocked to the safe-haven asset class.
Piboonlit Viriyaphol, director of Gold Research Center, said gold prices in the spot market jumped by $30 to $1,320 (43,771 baht), the year's peak so far, while the local price of gold bar with 96.5% purity rose by 300 baht to 20,700 baht.
In July, local gold prices hovered at 19,700 and 19,800 baht, but prices have climbed as a result of geopolitical tensions in the Korean Peninsula and the toll of Hurricane Harvey in Texas.
