Thai shares surged 1.49% yesterday on a buying spree ahead of the European Central Bank's (ECB) meeting as investors bet it would unveil quantitative easing measures, luring capital inflows to the local bourse.
The SET index, one of Asia's best performing stock markets yesterday, started the day on a positive note and buying intensified in the afternoon. The main gauge closed at 1,560.34 points, almost 23 points higher. Turnover was brisk at 65.80 billion baht.
Foreign investors continued piling up Thai shares, net buyers of 1.39 billion baht yesterday. However, for the year they have sold 17.03 billion baht more than they bought.
Most Asian stock exchanges rose. Hong Kong's Hang Seng Index added 0.7%, Taiwan's Stock Exchange Weighted Index advanced 0.53%, Jakarta's Stock Exchange Composite Index rose 0.73% and the Nikkei 225 gained 0.28%.
Teerada Charnyingyong, assistant vice-president for Phillip Securities (Thailand), said the SET gain is because of investors speculating the ECB would announce a bond-buying package worth 50 million euros a month.
The SET will rise slightly if the ECB does take this position as the move was already factored in during the recent run-up, she said.
After the ECB meeting, investor focus will shift to the US Federal Reserve meeting Jan 27-28 for a clue on when it will start jacking up its benchmark rate after the world's largest economy showed firmer signs of recovery.
SET chairman Sathit Limpongpan said the ECB decision would create volatility in equity and foreign exchange markets, but it would be short-lived because investors have experience with previous foreign stimulus measures.
Chaiyaporn Nompitakcharoen, executive vice-president at Bualuang Securities, forecast high volatility on the SET in the first half because of external pressure, an unpredictable political situation, and the financial performance of listed companies.
He tipped the tough support level to be 1,350-1,370 points.
"We could see the index hit the strong support level during the first quarter earnings season for listed companies," he said. However, the stock market could reach 1,675 points in the final quarter when the country's political direction is clearer, said Mr Chaiyaporn.
Stronger earnings could stem from growth of mergers and acquisitions, business expansion overseas and cost reduction, driving second-half bourse gains.
He recommended a defensive investment strategy for the first half, focusing on telecoms, food, banks, and infrastructure funds. Hire purchase, auto, energy, petrochemicals, and construction stocks are expected to perform well in the second half.