SET treads water after decree launch

The Thai stock market flatlined yesterday as the caretaker government's declaration of an emergency decree in the capital hardly weighed on market sentiment.

The SET index bucked most regional market trends, edging down 0.2% to close at 1,290.49 points yesterday with moderate trade worth 31.76 billion baht.

Thawatchai Assawapornchai, research manager at Globlex Securities, said the market showed little reaction to the emergency decree imposed for 60 days to deal with the ongoing protests by anti-government demonstrators on expectations that the military will refrain from using force to suppress the protests and the caretaker government must rely on the police as in the past.

"Protesters have ignored the government's orders and they will defy the emergency decree," he said.

He forecast that the index will move sideways in a range of 1,277 to 1,321.

Investors are expected to buy if the main gauge drops to 1,250 or below.

Foreign investors are also waiting for an opportunity to buy back once the political situation eases, he said. They sold 193 billion baht more than they bought last year and they continued their selling streak with around 7 billion baht in net sales so far this year.

In the meantime, Tisco Asset Management has cut its SET index target this year to 1,418 points from the previous 1,620 points after it trimmed its earnings growth forecast of listed companies to 10% from 15%, assuming that the political standoff will likely pose negative risks throughout this year.

Senior strategist Komsorn Prakobphol said the Thai bourse at present has no discount compared with regional peers, and the political polarisation will hurt Thai shares.

"The political situation does not look as severe as the 2010 protest, but the country's economy at the moment is not as solid as it was in the past," he said, adding that it recommends shifting investment to overseas markets as this will give higher returns than local equities and bonds.

Saharat Chudsuwan, first senior vice-president, said the support at 1,180 points, representing a price-to-earnings (PE) ratio of around 11 times, is strong enough to absorb the political pressure.

However, he recommended investors stay away from the local stock market.

He forecast average returns from foreign equity investment at 15-20%, adding that China may offer better returns, while Thai equity could offer up to 10% returns.

Japan is Tisco Asset Management's top investment destination.

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