Thai bourse joins in relief rally as us backs away from threatened financial cliff

Recap: The Stock Exchange of Thailand joined other regional markets to stage a rally in the first week of 2013 after US legislators agreed on a quick fix to prevent the country from falling off a fiscal cliff. Now comes the hard part: reining in unsustainable spending and debt.

The SET closed above 1,400 points with heavy trading volume on all three days. However, analysts suggested investors act with caution, as the market might drop this week due to pressure from long-term equity fund sales.

The SET index moved in a range of 1,391.93 to 1,416.67 points and closed at 1,416.66, up 1.8% from the end of 2012, in heavy daily trade averaging 45.8 billion baht.

Foreign investors were net buyers of 3.9 billion baht. Local institutions were net sellers of 2.34 billion, brokers sold 674 million, and domestic retail investors were net sellers of 886 million baht.

Big movers: Big-cap stocks topped the value table. PTT went up 0.9% to 335 baht, ADVANC was down 1.9% to 205 baht, KBANK rose 2.84% to 199 baht, and PTTEP gained 3.05% to 169 baht, while BTS shed 0.7% to 7.10 baht. Tops in volume was International Engineering (IEC), gaining 50% to six satang.

Newsmakers: The minutes of the US Federal Reserve meeting from Dec 11-12 showed members were concerned about an increase in its balance sheet to US$2.9 trillion, which signalled it would end the bond purchases that have been stoking market liquidity at some point this year.

- Finance Minister Kittiratt Na-Ranong plans to propose the first and second contracts of the Red Line electric train project (Bang Sue-Rangsit) to the cabinet this week, and there is a chance that bids could be called for a third contract.

- The Tourism Department reported a record 22.3 million foreign tourists visited the country in 2012, generating revenue of 960 billion baht. Tourism is expected to grow another 13% in 2013.

- The National Broadcasting and Telecommunications Commission (NBTC) has fined ADVANC, DTAC and TRUE 180,000 baht a day for failure to regulate the registration of prepaid numbers under the Telecommunications Business Act of 2001. It also ordered TOT to connect its network with DTAC and imposed a retroactive fine of 16.3 million baht on the state telecom enterprise.

- The Real Estate Information Center forecast the property market this year will maintain growth of between 5% and 10%, especially given the number of residential launches in the provinces.

- Myanmar is seeking to modify the Dawei deep-seaport special economic zone contract to have a holding company set up to handle the investment instead of Italian-Thai Development Plc.

- Thailand's inflation rate accelerated to a 13-month high in December, exceeding economists' expectations, as state subsidies failed to counter rising food prices. The consumer price index was up 3.63% last month from December 2011, the Commerce Ministry said last week.

- Thaicom Plc, the country's sole satellite services provider, has reached a framework agreement to sell its iPSTAR bandwidth in China. Details are to be finalised in the following months.

Coming up this week: US markets are expected to remain highly volatile since legislators have not yet done anything meaningful about long-term fiscal and debt concerns. Moody's last week warned Congress it must act on budget deficit cuts, as higher US debt has affected its creditability.

- In the Thai market, concerns are over profit-taking by LTF unitholders eligible to sell after holding the funds for five calendar years. As well, a trigger fund has closed after the SET index surged in recent weeks.

- The Bank of Thailand's Monetary Policy Committee will meet on Wednesday and is expected to keep the policy interest rate at 2.75%.

Stocks to watch: Asia Plus Securities recommends low P/E stocks like TOP and MK, PTT, TCAP, SEAFCO, STPI, ROJNA, TICON, HMPRO, THRE, TIP, ASK, TK, DTAC, INTUCH and BGH.

DBS Vickers recommends buying BECL, BTS, KTB, PTT, STEC, INTUCH, MAJOR, MCOT and STPI.

Technical view: Asia Plus Securities sees support at 1,391 and resistance at 1,419 points. Phillip Securities sees support at 1,380 and resistance at 1,430 points.

About the author

Writer: Nuntawun Polkuamdee & Darana Chudasri