MARKET MONITOR

Recap: The Stock Exchange of Thailand hit a high not seen since January 1996, supported by huge foreign buying, more exposure in the MSCI, and positive news from the EU. But the index was unable to close above the strong resistance at 1,360 points.

The SET index moved in a range of 1,338.30 and 1,360.23 points and closed at 1,358.50, up 1.8% from the previous week, with heavy average daily turnover of 41 billion baht. Foreign investors remained big net buyers of 8.19 billion baht and brokers bought 186.31 million. Local institutions were net sellers of 1.04 billion baht and domestic retail investors sold 7.34 billion.

Big movers: The 7-Eleven operator CPALL led the turnover table, rising 6.7% on the week to 43.75 baht. PTTEP rose 3.9% to 159 baht. Tata Steel Thailand (TSTH) moved up 30.5% to 1.07 baht on speculative buying.

Natural Park (N-PARK) was tops by volume, rising on speculative buying after the property company announced that media tycoon Pracha Maleenont had acquired 29.5 billion shares or 24.5% in a private placement. N-PARK shares doubled in value _ to six satang.

The cosmetics distributor Beauty Community (BEAUTY) soared on its market debut on Tuesday, opening at 19 baht and closing the week at 17.20, up 115% from the IPO price of 8 baht.

Newsmakers: Market sentiment was positive as the US Federal Reserve announced what some analysts called QE4 _ monthly purchases of $45 billion in treasuries on top of the $40 billion in mortgage-backed bonds it started buying in September. It also said near-zero interest rates would remain until the unemployment rate falls to 6.5% from 7.7% now. However, there was no progress on fiscal cliff negotiations as the White House and Republican lawmakers showed no signs that either side was ready to give ground.

- The outlook for the European economy has worsened. The German central bank cut its forecast for the country's GDP growth in 2012 to just 0.7% from its previous estimate of 1%. It also lowered its forecast for 2013 growth to 0.4% from 1.6% previously. German unemployment is forecast to rise to 7.2% next year from 6.8% now, said Finansia Syrus Securities.

- Phillip Securities research expects Thai monetary policy to remain loose, noting a Bank of Thailand view that risks to economic growth will be higher than inflation risk next year.

- The Laotian government is appealing against an arbitration ruling in favour of Siva Nganthavee in connection with the Hongsa power project in Laos. Mr Siva's group has already won a huge judgement against Banpu Plc for allegedly squeezing him out of Hongsa, but Banpu is appealing. A court in Kuala Lumpur is hearing Vientiane's petition to reverse the arbitration award made in 2009.

- Phatra Securities expects Thai GDP to grow 5.3% this year and 4.5% in 2013 and then rise to 5% in 2014. The key growth driver for the first half of 2013 is domestic demand, particularly private spending, such as the highly successful first-time car buyer programme which will spill over into 2013. For the second half of 2013, Phatra expects a modest export recovery and investment (both from the private sector and the government) as the main growth engines.

- Kasikornbank aims to play the role of an Asian bank as future trade and investment activity will be driven by Asean+3 (including China, Japan and South Korea) rather than by just the 10 countries making up the Southeast Asia grouping.

- Siam Cement Group (SCC) says it will invest in its cement, construction materials and distribution businesses over the next five years. The investment plan reflects good prospects for construction, especially infrastructure in Thailand, Indonesia, Myanmar and Vietnam. SCC expects 10% sales growth in 2013.

- The Thai advertising industry is expected to grow by 10-15% next year and third-generation (3G) mobile services will be a boon for digital media, according to the media agency Brand Connections. This year, growth of advertising spending will be 12-14% as the economy continues to expand.

Coming up this week: November domestic car sales figures will be released and are expected to show demand continuing at a record pace. December figures will be even stronger, with more than 80,000 orders placed at the recently concluded Motor Expo.

- The new parliamentary session opens on Friday, minus the drama of any attempt by the Pheu Thai government to press ahead with a constitutional amendment. A public referendum must be held first, party strategists have decided.

Stocks to watch: Finansia Syrus Securities recommends being overweight on construction stocks next years as the government steps up spending _ 438 billion baht has been budgeted _ on big-ticket infrastructure, part of a programme costing 2.2 trillion over seven years. Another 350 billion has been budgeted for water management project. Construction companies securing such large-scale projects should have stable recurring revenue in the long run. STEC is the broker's top pick, followed by CK and ITD. Another strong domestic play is CPALL with growth seen as steady until 2015.

- Asia Plus Securities likes TOP for the end of 2012 and early 2013 for its increasing gross refinery margin. It also recommends PTT, DTAC and INTUCH and advises holding CK as the upside has become limited.

Technical view: Asia Plus Securities sees support at 1,350 and resistance at 1,379. Capital Nomura Securities sees support at 1,345 and resistance at 1,375.