The Thai stock market will reach 1,700 point in two years, driven by foreign fund inflows on the back of low global interest rates and the likelihood that the US and European economies will take another year to recover, according to Paiboon Nalinthrangkurn, chief executive at Tisco Securities.
Mr Paiboon said listed firms still have earnings growth and dividend yields higher than the deposit rate, while the market's forward price-to-earnings ratio is still lower than those of the top-performing countries in the region.
Last year, the Turkish stock market recorded the highest global returns at 60%, followed by the Philippines and Indonesia.
The Stock Exchange of Thailand enjoyed the fifth-highest growth rate in the world last year.
"Political risk is the normal negative factor in Asean countries, but foreign investors were experienced and ignored it. Earnings growth must be more significant for investment," Mr Paiboon said.
He said concerns remain over US unemployment, while Europe's problems bottomed out in the fourth quarter last year even though it is still in recession.
"US central bank governor Ben Bernanke said that whenever the unemployment rate is not lower than 6.5%, there is a need to inject liquidity into the economic system and interest rates will remain low until 2015," said Mr Paiboon.
With low interest rates, equities offer better returns. But when interest rates are rising, funds will out flow to Western countries and stock will go down again, he said.
He said the SET index this year could rise about 15% from 1,400 points, while listed earnings are projected to grow 15-20%.
The energy sector is still struggling but has potential for growth in the second half of the year.
Mr Paiboon, also chairman of the Federation of Thai Capital Market Organisations (Fetco), said Fetco plans to push for capital market development.
It has also called for the Finance Ministry to quickly work out a way of reducing the impact of the US Foreign Account Tax Compliance Act.
Fetco also will focus on expanding the number of investors by promoting a financial literacy programme, supporting state enterprise privatisation and moving forward the merger and acquisition law and the incentive tax for venture capital funds and private equity.
It will also ask for an extension period for tax privileges for investment in long-term equity funds that are due to expire in 2016, while it plans to set up investment information centres in provincial cities around the country.