Thailand's bull market is expected to continue for a few more years as foreign funds shift from debt markets to equities, says Tisco Securities.
Chief executive Paiboon Nalinthrangkurn said the market projects an end to quantitative easing (QE) in the US will be the main factor moving fund flows from bond markets to equities, including Thailand's emerging bourse. The gradual shift will depend on a clearer policy from the Federal Reserve on a QE exit.
Despite massive foreign capital fund flows into the Thai bond market since the US sub-prime crisis, an insignificant amount has reached the Stock Exchange of Thailand (SET).
After the liquidity injection of QE measures since 2008, bond yields over the world have been increased by 50% on average, but equity market growth is only 2-3%, said Mr Paiboon at a seminar.
"For the next six months, a fund shift from bonds to equities - called the 'great rotation' - is expected to begin across the world. The SET index has a high possibility to surpass the existing projection of 1,789 points this year," he said.
Average growth in earnings per share (EPS) of local stocks is projected at 15-20% per year for a few years, thanks to the new domestic investment cycle.
Indonesia's stock market has increased by 1,200% over the past decade, with its price-to-earnings (P/E) ratio rising to 13 times from six times.
Mr Paiboon said the SET's P/E ratio remains at a reasonable level for buying. The ratio has increased by 4% from 2009 and 6% from 2011.
Meanwhile, average EPS growth of local stocks was 100% from 2009 and 40% from 2011.
About the author
- Writer: Somruedi Banchongduang
Position: Business Reporter