News Room - Business/Economics

Posted on 08 Sep 2009

‘Thai Khemkhaeng programme’ expected to boost some sectors.

Some correction is expected at the Stock Exchange of Thailand (SET) Index this week, but it is unlikely to be a strong adjustment, and will probably entail a shift to new industries. The big market capitalisation stocks will move sideways, while medium and small market capitalisation stocks are likely to rise. The following stocks show apparent turnaround potential:

For the construction sector, demand is likely to increase globally due mainly to economic stimulus packages in many countries. For Thailand, the "Thai Khemkhaeng" scheme will help boost demand. Thus, interesting stocks include Sahaviriya Steel Industries (SSI) with fair value of Bt1.26 a share, as steel prices are likely to rise, and Vanachai Group with fair value of Bt2.99. The stock is likely to announce a net profit for the third quarter.

The auto sector bottomed out in the first half and is expected to recover in the second half.  Somboon Advance Technology with fair value of Bt13.8 a share is likely to see higher income in the second half, while Thai Stanley Electric with fair value of Bt104.38 a share is likely to gain the highest benefit from the expected revision of the excise tax. The hotel sector saw a 15 percent month on month increase in tourist numbers in July, while the occupancy rate rose from 41 per cent to 46 per cent. Minor International, with fair value of Bt11.12 a share, is benefiting from diversification, while Central Plaza Hotel, with fair value of Bt4.4 a share, will see more income from its new hotel in Pattaya.

Kavee Chukitkasem,

Assistant Managing Director, Kasikorn Securities

The Thai stock market was depressed early last week by the sharp fall in China's stock market on concerns about the Chinese government's announcement that it would limit lending. The anxiety also put pres?sure on the oil price and Thai energy stocks as a consequence.

The rising concern that a SET correction will be seen within this month also dampened the market.

However, the Thai stock market successfully rose late last week as China's Purchasing Manager Index (PMI) was higher than expected, while investors believe the govern?ment will implement a relaxed monetary policy after authorities said the government would manage to stabilise the stock market.

The International Monetary Fund (IMF) also plans to revise upwards its global GDP estimate from a contraction of 2.5 per cent for this year.

We believe Thailand's economy will return to growth in the fourth quarter. We recommended medium term investors hold sound fundamental stocks.

Investors might pile up PTT Exploration and Production, Bangkok Bank, Minor International, Bumrungrad Hospital, Hana Microelectronics, Thai Stanley, Asian Property Development, Charoen Pokphand Foods and Thai Vegetable Oil.

The broker has maintained its SET Index target at 710 points for the end of this year or early next year.

Shortterm investors should pick stocks that have issues for specula?tion. These stocks are Advanced Info Service on speculation about the 3G report; MCOT and TVO on high dividend payments; AP and Quality Houses on high presales; and Tata Steel (Thailand) on steel price hikes.

Sukit Udomsirikul,

Assistant managing director, Siam City Research Institute

We believe China's economic policy is still a key factor affecting the stock market on the mainland as well as the global market, despite China's insisting on a gradual change in banks' capital requirements. However, there is pressure from limited upside gain on the SET Index. Besides, a rally in lower risk assets such as gold has been a negative sign for the stock market.

The Chinese government's attempt to restore confidence has so far boosted the stock market only in the short term, although some key economic indicators have improved. The market has already absorbed these positive factors.

This week is also significant as Beijing will announce lending figures for August, with a consensus forecast of 320 billion yuan, lower than July's 355.9 billion yuan, but up18 per cent year on year.

However, there's a chance that mid and small capitalisation stocks will outperform as the "Thai Khemkhaeng" will support sentiment.

We suggest investors shift from the commodity sector to domestic plays such as the construction materials, construction and property sectors.