The Stock Exchange of Thailand's resilience against external headwinds continued yesterday, with the SET index rising by 26 points, buoyed by clearer developments in the country's general election.
Institutional and foreign investors flocked to buy domestic equities as the Election Commission (EC) prepared to redraw constituencies ahead of the general election, tentatively scheduled for February 2019, after the regime eased the ban on political activities.
The EC is required to redraw the boundaries nationwide after a law on the election of MPs was royally endorsed and published in the Royal Gazette last Friday, even though it will only take effect 90 days after its publication.
According to a new Section 44 order issued on Friday, parties have the green light to carry out some necessary activities to prepare for the election, but all forms of campaigning remain forbidden.
The SET index closed at 1,744.42 points, up 1.5%, in heavy trade worth 79.7 billion baht.
Institutional investors were net buyers of 4.85 billion baht, while foreign investors and brokerage firms bought a net 1.5 billion and 682 million worth of equities.
On the other hand, retail investors were net sellers of 7 billion baht.
Shares in the energy, tourism and banking sectors rose yesterday, with IVL gaining 4%, followed by AOT (+2.3%), PTTGC (+2.2%), PTT (+2%) and KBANK (+1.9%).
Wijit Arayapisit, a senior analyst at Maybank Kim Eng Securities Thailand, said further clarity on Thailand's general election and the country's strong economic fundamentals have increased investment appetite, subsequently resulting in a return of capital inflows to the local bourse.
Although there are pertaining external factors, such as the China-US trade row and the US Federal Reserve's interest rate normalisation, keeping a lid on investor confidence, market participants have already absorbed these factors, Mr Wijit said.
An important development warranting a close watch today is the Bank of Thailand's Monetary Policy Committee (MPC) meeting to deliberate the policy interest rate, he said, noting that one MPC member voted for a 25-basis-point rate hike at the previous meeting in August.
The SET index has strengthened past the resistance level at 1,730 points, therefore the next resistance level anticipated is 1,750, Mr Wijit said.
Teerada Charnyingyong, head of research at Phillip Securities Thailand, said the SET index rose sharply yesterday compared with regional peers, mainly due to progress on the general election.
The EC is expected to finish redrawing constituencies in 60 days and declare the new boundaries before the law on the election of MPs goes into effect, Ms Teerada said.
External factors, however, still remain a concern, particularly as to how China is poised to retaliate against the US's new trade tariffs, she said.
Phillip Securities Thailand projects the SET index's resistance level at 1,750 points and support level at 1,745.