Thai Stocks Advance to Highest Since 1996, Before Asian Financial Crisis
Thai Stocks Advance to Highest Since 1996
Udo Weitz/Bloomberg
The SET Index climbed 0.8 percent to 920.39 at 10:51 a.m., exceeding the previous peak set on Oct. 29, 2007, as banks and energy producers gained after a central bank report yesterday showed July factory output rose more than economists estimated.
The SET Index climbed 0.8 percent to 920.39 at 10:51 a.m., exceeding the previous peak set on Oct. 29, 2007, as banks and energy producers gained after a central bank report yesterday showed July factory output rose more than economists estimated. Photographer: Udo Weitz/Bloomberg
Thailand’s benchmark stock index, Asia’s best performer, rose to the highest level since 1996 and the baht gained as easing political tensions and improving earnings boosted confidence in Southeast Asia’s largest economy.
The SET Index climbed 0.4 percent to 917.13 at the 12:30 p.m. break as banks and energy producers gained after a central bank report yesterday showed July factory output rose more than economist estimates. The stock gauge is set for the highest close since December 1996, before the onset of the Asian financial crisis. The baht advanced 0.4 percent to 31.17, the strongest level since March 2008.
The equity measure has rebounded 27 percent since reaching a low in May, when troops broke up anti-government protests after clashes killed at least 89 people. The nation’s economy expanded 9.1 percent in the second quarter as companies from Bangkok Bank Pcl to Siam Cement Pcl reported higher-than- expected profit.
“Thai equities can continue to gain as economic growth bolsters corporate earnings,” Prapas Tonpibulsak, who helps manage $2.5 billion of assets as chief investment officer at Ayudhya Fund Management Co. Ltd., said by phone today. “Foreign investors are also returning as the political situation improves from the bad situation a few months ago.”
Overseas investors sold a record net $1.9 billion of Thai equities in May, when Prime Minister Abhisit Vejjajiva ordered a military assault on May 19 to end two months of protests in Bangkok, provoking riots and arson attacks across the capital.
Thaksin Legacy
Abhisit has faced demonstrations since taking power in a 2008 parliamentary vote after a court dissolved the ruling party linked to ex-leader Thaksin Shinawatra for election fraud. The fugitive billionaire and his allies have won the past four elections.
“Everybody thought Thailand would go down with the riots,” Mark Mobius, who oversees about $34 billion as Singapore-based executive chairman of Templeton Asset Management Ltd.’s emerging markets group, said Aug. 19. “Having lived here and having experienced the change in government in the past we have seen the improvement that is taking place.”
Mobius said Templeton has increased its investments this year as the nation’s economy recovered from recession and shrugged off the effects of the political protests.
Foreign investors bought a net $505 million of Thai equities in August, more than the combined net purchases for June and July together.
Annual Gain
The stock index’s 25 percent advance this year is the most among Asia Pacific’s 15 biggest stock markets, data compiled by Bloomberg show. The SET Index may rise to 1,040 next year, a 44 percent rebound from the low in May, as consumption and investment increases, Kasikorn Securities’ Kavee Chukitkasem said on Aug. 19.
Thailand’s consumer confidence rose for a third straight month in July as the pace of the economic recovery quickened. Ford Motor Co., General Motors Co. and Nissan Motor Co. have expanded production in Thailand this year to tap rising demand in the domestic and overseas markets.
The central bank expects 2010 economic growth of as much as 7.5 percent, which would be the strongest pace since 1995, before the collapse of the baht in 1997 helped trigger the Asian financial crisis, in which Thailand, Indonesia and South Korea were forced to seek International Monetary Fund bailouts.
The country’s exports jumped 46 percent in June from a year earlier, the most in more than 18 years, before cooling to a 20.6 percent pace in August. Overseas demand, which has lifted export-dependent Asian economies including Thailand and Singapore, may falter amid signs of a global slowdown.
Baht Strength
The baht extended August’s rally, the biggest monthly advance since February 2008. The baht’s strength isn’t a major obstacle for businesses and the volatility is still lower than that of other regional currencies, Mathee Supapongse, the central bank’s director for domestic economy, said yesterday.
“There is strong optimism over the Thai economic outlook and that helps to increase fund inflows, putting appreciation pressure on the baht,” said Minori Uchida, senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. “Another reason for the baht’s recent rapid gains is the central bank’s stance. They seem to be more tolerant with gains.”
PTT PCL, Thailand’s biggest energy company, climbed 1.5 percent to 269 baht. Siam Cement, the nation’s third-largest publicly traded company, rose 1 percent to 399 baht, the highest since at least 1990.
Industrial production climbed 16.3 percent in July from a year earlier, the Bank of Thailand said yesterday, compared with the median forecast in a Bloomberg survey of a 15.3 percent increase.
Siam Commercial Bank Pcl, Thailand’s fourth-biggest lender by assets, gained 1.3 percent to 96.5 baht after agreeing to sell a 38.7 percent stake in Siam Industrial Credit Pcl for 923.5 million baht at 4 baht a share.
To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net.
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