The Thai stock market surged 2.27% yesterday to top the 1,300-point psychological level, recouping some of the recent losses, but analysts have mixed views on whether the big correction is over.
The Stock Exchange of Thailand index rose from the opening bell, tracking most regional bourses, as upbeat Chinese manufacturing data and eased fears of a military strike on Syria lifted market sentiment. The main index closed at the day's high of 1,323.70 points in moderate trade worth 34.21 billion baht, with bank and telecom blue-chips leading the gains.
The SET has recouped around 5% from this year's intraday trough at 1,260.08 on Aug 28.
Foreign investors continued to be net sellers of 1.41 billion baht yesterday, bringing their combined net selling to 117.44 billion baht year-to-date.
The heavy capital outflows, which have pushed the local currency beyond the 32-baht mark to the greenback, have turned the Thai bourse into a bear market after losing more than 20% last week from the year's peak in May.
Asia Plus Securities senior vice-president Therdsak Thaveeteeratham said the rebound could not be sustained, as concerns about Syria tensions and the US Federal Reserve's potential tapering of its monthly asset purchases will likely flare up again in the days ahead.
The anticipated Federal Open Market Committee (FOMC)'s policy rate call is set for Sept 17-18.
"Another sell-off could return the SET to 1,260," he said.
But KTB Securities senior vice-president Parin Kitchatornpitak is optimistic, saying the sharp gain yesterday indicated the big correction was over.
China's official Purchasing Managers Index jumped more than estimated to a 16-month high of 51, noted a government report. A separate PMI released today by HSBC Holdings Plc and Markit Economics grew to 50.1 last month from 47.7 in July, the largest gain since 2010. Readings above 50 signal expansion.
"The Thai stock market bottomed out last week, as all negative factors had already been discounted," he said, adding the local bourse could move upward in a zig-zag pattern.
Mr Parin predicted the SET could hit KTB Securities' 1,573-point target in the final quarter.
"It doesn't matter if the Fed announces a cut in its quantitative easing scheme at its September meeting. Even if it does, the stock market will fall but recover quickly because uncertainty has been eliminated," he said.