Thai Stock Index May Gain 11% After Election
Thailand's benchmark stock index, the world's best performer in the past week, may rally another 11 percent as an election victory by allies of exiled former Premier Thaksin Shinawatra lures overseas investors, the nation's biggest money manager said.
The SET Index may climb to 1,200 by the end of this year, Petcharat Powattanasatien, who help oversee about $23 billion of assets at Bangkok-based Kasikorn Asset Management Co., said in a phone interview yesterday. That level would be the highest since July 1996. The gauge closed at 1,084.59 yesterday.
The Pheu Thai party, led by Thaksin's sister Yingluck Shinawatra, won 265 seats of a total 500 in the July 3 election, allowing her to become the country's first female prime minister. The party has pledged to raise minimum wages, increase rice prices and accelerate the construction of mass transit systems to boost incomes and spur economic growth.
"Overseas investors will pour in more money into Thai equities following the large sell-off because the vote removed their fear about political instability," Petcharat said. "The government's spending will also bolster the economy and domestic consumption, which will fuel growth in corporate earnings."
Thailand's stock index rallied 4.7 percent two days ago, the biggest gain since April 2010, after Pheu Thai's victory over Prime MinisterAbhisit Vejjajiva's Democrats. Overseas investors bought 10.7 billion baht ($351 million) more Thai stocks than they sold on the day, the most since Dec. 8, 2010.
Best Performer
They sold a net 27 billion baht in June as the SET Index slumped 3 percent. The gauge's 7.4 percent gain in the past week is the most of 91 primary indexes tracked by Bloomberg.
Petcharat's K SET 50 Index Fund (KRSET50) has gained 43 percent in the past year, beating 95 percent of its peers, according to data compiled by Bloomberg. The SET 50 Index, the gauge that the fund tracks, has risen 35 percent in that time.
Petcharat declined to specify which individual shares Kasikorn Asset sold and bought. She recommends shares of banks as improving confidence among businesses and consumers will boost loan growth and favors property developers as Yingluck's party campaigned for tax incentives for home purchases. She also likes mobile phone companies as the new government may grant new licenses for high-speed wireless service.
Pheu Thai will allow a tax allowance for buyers of their first houses, according to the party'swebsite. It will also speed up the offering of so-called third-generation wireless service in the country for the first time, it said. The party has also pledged to build new mass-transit systems in the capital of Bangkok and nearby provinces.
Policy Implementation
"After forming a new government, there are many mega projects in the pipeline that can be implemented right away, which in turn would instill everyone's confidence to invest, lend, spend and consume," Voravan Taraphum, managing director of BBL Asset Management Co. Ltd., which has about $4.9 billion of assets, said in an e-mailed response to questions yesterday. "The new government's immediate policy implementations will continue to be positive for the stock markets."
Voravan's BBL Bualuang Thanakom Open-end Fund (BTK) has climbed 17 percent this year, beating 95 percent of its peers, according to data compiled by Bloomberg.
Thaksin was ousted in a 2006 coup and has lived overseas since fleeing a jail sentence for abuse of power. Parties linked to him have won the past four national elections on support in northern areas for cheap health care plans and microcredit policies. Demonstrations by his supporters last year led to 91 deaths.
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