SET index rises 10.07 points

SET index rises 10.07 points

Thai stocks gained 0.6% on Friday on economic optimism and news that four local blue-chips would be added to the MSCI Global Standard index of shares.

The Stock Exchange of Thailand Index rose 10.07 points from Thursday to close at 1,627.96, an increase of 0.3% from 1,622.48 a week earlier. Turnover was 55.29 billion baht, with 10.45 billion shares traded.

The market is up 16.9% from the end of 2012. Average daily turnover for the first four months of this year was 61.82 billion baht, up 102.48% from the same period last year, according to SET data released this week.

Investor sentiment was helped by news that four blue-chips - In Touch (INTUCH), HomePro (HMPRO), Minor International (MINT) and True Corp - would be added to the MSCI index starting from June 1. Inclusion in the MSCI indices increases a company's appeal to large foreign funds.

Foreign investors were net buyers on Friday of 397.44 million baht worth of Thai shares. Local institutions were net buyers of 267.4 billion baht and brokers bought 277.3 million. Individual investors were net sellers of 942.1 million baht. 

For the year to date, foreign investors have sold 7.8 billion baht more in Thai shares than they have sold. The share of foreign investors has dropped to 18.7% of total market turnover as of the end of April, from 24.2% a year ago.

Trading by retail investors has been climbing steadily since the third quarter of last year and is now 63.5% of total turnover, compared with 55% last year.

With retail investors more active, market officials say more stocks outside the blue-chip SET50 have been in play, which could increase the risk of volatility.

World stock markets were mixed as investors digested disappointing data from the US ahead of the release of leading indicators later in the day.

Britain's FTSE 100 fell marginally to 6,684.26, Germany's DAX retreated 0.4% and France's CAC-40 was down less than 0.2%. Wall Street, however, appeared ready to rally again as Dow Jones industrial futures rose 0.1% to 15,225.

In Asia, Japan's Nikkei 225 rose 0.7% to 15,138.12. The index has returned 45% so far this year.

Australia's S&P/ASX 200 added 0.3% to 5,180.80, pushed up by gains in BHP Billiton, the world's largest mining company. Benchmarks in China and Indonesia also rose while those in Taiwan, India, Singapore, New Zealand and the Philippines fell. Markets in Hong Kong and South Korea were closed for public holidays.

In Bangkok, the SET50 index of blue chips ended at 1,079.78 points, up 6.89 points, with total trade value of 29.88 billion baht. The SETHD index of high-dividend shares fell 5.35 points to 1,261.16, with turnover of 6.32 billion baht. The Market for Alternative Investment gained 0.76 points to 490.16, with transaction value of 1.94 billion baht.

The five most active shares by value were all telecoms and construction contractors: INTUCH, up 7 baht to 97.25, its mobile subsidiary ADVANC, up 14 baht to 299 baht; TRUE, up 15 satang to 9.75 baht; Ch. Karnchang (CK), up 1.75 to 28.50 baht; and ITD, up 45 satang to 8.75 baht.

In the currency markets, the baht continued to weaken as investors speculated about whether the central bank intended to cut its benchmark interest rate.

The baht was trading late Friday in Bangkok at 29.76/80 per dollar, near a two-month low of 29.83 reached on Monday, and compared with 29.70/73 on Thursday and 29.70/72 a week earlier.

Government bond yields rose from a two-year low on speculation that the weakening of the baht would reduce the odds for an interest-rate reduction.

The yield on the 3.625% notes, which are more sensitive to changes in borrowing costs, climbed one basis point from a week ago to 2.69%. The rate had reached 2.68% on May 10, the lowest since October 2010.

"From the economic fundamentals point of view, I don't think a rate cut is necessary at the moment," said Koji Fukaya, CEO of FPG Securities in Tokyo.

"If the rate cut is used to stem baht appreciation, then the drop in the baht trimmed the expected degree of such a move."

Niwat Kanjanaphoomin, president of the Thai Bond Market Association, said earlier that the Bank of Thailand may cut its interest rate by as much as 50 basis points at the May 29 meeting rather than impose capital controls that would deter investors.

The baht, which last month touched 28.55, still remains Asia’s best-performing currency this year with a gain of 2.5% against the dollar.

Capital controls are unlikely unless the currency trades around 28 per dollar or exports start to lose their competitiveness, Mr Niwat said.

Thai Chamber of Commerce chairman Isara Vongkusolkit said yesterday after meeting with the central bank that the organisation was satisfied with the current level of the currency.

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