Vaccine optimism nudges SET upwards

Vaccine optimism nudges SET upwards

A stock display updates at a brokerage firm. Pornprom Satrabhaya
A stock display updates at a brokerage firm. Pornprom Satrabhaya

The SET Index broke 1,400 points for the first time in five months on Monday, a fast recovery from below 1,300 points just two weeks ago, spurred by news of two successful Covid-19 vaccines.

The index rebounded from 1,187.49 points at the end of October, the lowest in the past seven months.

While global markets are on an uptrend, the sudden 100-point spike may result in a correction, said Terdsak Taweethiratham, executive vice-president at Asia Plus Securities (ASP).

ASP targets the SET Index at 1,350 points this year and a range of 1450-1480 points next year.

Mr Terdsak said the company is maintaining its SET target, even though local bourses are supported by the prospect of an economic turnaround thanks to signs of growth and inflows from excess local liquidity and foreign capital movement.

Total bank deposits, as of ending of September, were 15.5 trillion baht, declining from 15.6 trillion baht a few months ago, but still larger than SET market capitalisation and the country's GDP.

Returns on bank deposits, which remain very low, are driving investors to move money to assets with higher returns while the market is risk-on.

"I suggest investors select fundamental shares and move to large and medium stocks," he said.

In November, foreign investors reported net buying worth 33.93 billion baht with Monday's add-on at 2.77 million baht.

The year-to-date net seller remains at 265.62 billion baht.

FOREIGN BOND BUYING

Foreign flow totalling 948 million baht moved to the bond market on Monday after a sharp turn with net sell offs worth 9.52 billion baht on the last two operation days stimulated by the Bank of Thailand's launch of measures to boost local purchase of foreign currencies.

In November, foreign investors reported net buying month-to-date at 40.3 billion, while the year-to-date volume is still net sales of 35.5 billion.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said the return of foreigners in Thai bourses is to "catch the train" after a huge sell-off induced by the panic over the pandemic decimating tourism and the economy since earlier this year.

Mr Kobsidthi said Thai shares at this time could also profit from the stronger baht.

The baht has strengthened since April because fund management companies sold investments in foreign countries to prepare domestic liquidity as mutual funds were redeemed.

The baht's gains were further propelled as demand for the Chinese yuan ramped up, with foreign investors buying Chinese bonds after the FTSE increased the weight of China's bonds in the index.

This stronger yuan opens space for a stronger baht, Mr Kobsidthi said.

In the past month, the baht weakened to 31.13 baht per US dollar (Oct 23) from its peak at 30.14 baht (Oct 16).

The average buying rate for sight bills fell lower than 30 baht for a short period (during Nov 13-18) along the range of 29.9956-29.9089 baht per US dollar.

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