The Stock Exchange of Thailand (SET) index closed at an all-time high Thursday, finishing at 1,802.80 points, with analysts pointing towards the bullish rally going forward thanks to sanguine economic prospects.
The benchmark was up by 0.44% yesterday in heavy turnover worth 86.8 billion baht.
Brokerage firms were net buyers of 1.65 billion baht, with retail investors purchasing 1.14 billion worth of shares. Institutional investors and foreign investors were net sellers of 1.64 billion and 1.14 billion baht, respectively.
The SET index is poised to continue its bull run and skyrocket to 1,900 points by year-end due to rosy earnings growth among listed firms and Thailand's healthier economic growth, says SCB Securities (SCBS). A forward price-to-earnings (P/E) ratio of 15.6 times is expected.
SCBS projects the SET index to move in a range of 1,720-1,840 points in the first quarter.
The GDP of Southeast Asia's second-largest economy is anticipated to expand by 5-6% this year, whereas SET-listed companies' earnings are projected at 8-10%, according to SCBS.
Fiscal stimulus policy, amendments made to business law aimed at facilitating investment in the Eastern Economic Corridor, and prospects of an increase in the daily minimum wage are key attributes helping propel the country's economic growth outlook in 2018, said Isara Ordeedolchest, senior vice-president of the investment strategy department at SCBS.
"Thailand's economy this year will be driven by government expenditure and private consumption, together with the slated general election," said Mr Isara.
The government has implemented infrastructure projects that will speed up private investment for both local and foreign investors, he said.
Isara: Lower deflation helps the stock market
"Deflation has also eased, making it a good year for the stock market."
The International Monetary Fund forecasts global economic growth to speed up along with a rise in inflationary pressure and long-term interest rates, with the exception of Japan, which maintains its policy to control returns made on bond investment.
Amid this outlook, Mr Isara said stocks, considered a high-risk asset, are expected to generate a handsome return compared with bonds.
Stock picks for the first quarter are comprised of equities benefiting from the government's economic stimulus policy, new investment cycle, and prolonged low interest rate, such as banking, transportation, and property, he said.
BBL, BLA, BTS, KTB, LPN, and QH are identified as stocks with good growth potential.
Pornthep Jubandhu, senior vice-president of the investment strategy department at SCBS, said Thailand's stock market is current driven by local institutional investors as they have shifted their investment from bonds into equities due to how returns in bond investment have remained low for a protracted period.
"So far, the SET is not affected from capital outflows due to liquidity derived from local institution investors and retail investors," said Mr Pornthep.
SCBS projects the SET index to move in a range of 1,720-1,840 points in the first quarter.
Sorrabhol Virameteekul, investment strategist at Maybank Kim Eng Securities Thailand, said the SET index's technical view for the first quarter is expected to be between 1,720-1,870 points, with recommendation of large-cap stock purchase and equity sales when share prices rise.
KT Zmico Securities' research department sees the index hovering around 1,750-1,880 points, with the recommendation of accumulated purchase of high dividend stocks.