Thai-Chinese railway expected to yield stock gains

Thai-Chinese railway expected to yield stock gains

A model of the Thai-Chinese railway project. The prime minister issued a Section 44 order to jump-start construction of the railway. CHANAT KATANYU
A model of the Thai-Chinese railway project. The prime minister issued a Section 44 order to jump-start construction of the railway. CHANAT KATANYU

The long-delayed Thai-Chinese high-speed railway line, soon to break ground after the invocation of Section 44 to clear technical and legal hurdles, is expected to help construction stocks outshine others this week.

In addition to the construction sector, building materials, industrial estates and property are expected to enjoy gains from the soon-to-be-constructed railway, Capital Nomura Securities (CNS) said in a research paper.

The rising stocks include Ch Karnchang Plc (CK), Sino-Thai Engineering and Construction Plc (STEC), Unique Engineering and Construction Plc (UNIQ), Siam Cement Plc (SCC), Seafco Plc (SEAFCO), Pylon Plc (PYLON), Amata Corporation Plc (AMATA), Rojana Industrial Estate Plc (ROJNA), Bangkok Land Plc (BLAND), Ananda Development Plc (ANAN) and AP Thailand Plc (AP).

Prime Minister Prayut Chan-o-cha exercised his power as chief of the National Council for Peace and Order (NCPO) to issue a Section 44 order to speed up the joint rail development scheme.

The NCPO order published in the Royal Gazette last Thursday waives some regulations to allow Chinese engineers and architects to work on design and construction as well as procurement of the high-speed train system for the Bangkok-Nakhon Ratchasima route.

Win Udomratchvanich, managing director of KTB Securities Thailand, said construction stocks will react positively to the Thai-Chinese railway project.

He also forecasts that foreign fund inflows into the Asian market will continue after the US Federal Reserve raised its policy rate last week, as widely expected.

Investment strategy this week is holding cash at 30% and selective buying in low-risk stocks (those with core business related to government investment) and other stocks that have supporting factors, Mr Win said.

The names include PTT Global Chemical Plc (PTTGC), PYLON, CK, Univentures Plc (UV), Berli Jucker Plc (BJC), ALT Telecom Plc (ALT), Amanah Leasing Plc (AMANAH), Scan Inter Plc (SCN) and Charoen Pokphand Foods Plc (CPF).

Mr Win said factors that need to be watched include when the US central bank will start cutting its US$4.2 trillion (143 trillion baht) portfolio of treasury bonds and mortgage-backed securities.

"KTBS forecasts that the Federal Open Market Committee (FOMC) will spend about five years reducing its balance sheet to 2008 levels [when quantitative easing started]," he said.

For the baht, he said the local currency will continue to appreciate against the greenback if offshore funds continue flowing into the Thai bond market.

The baht has surged about 5% against the US dollar so far this year.

The construction sector index yesterday, however, fell 0.7% to close at 129.93 points in trade worth 2.04 billion baht.

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