SET expected to reach 920 points

SET expected to reach 920 points
Bangkok Post (11 October 2007)

SCB Asset Management predicts that foreign capital will continue to flow into the Thai markets and drive the SET index to reach 920 points by year-end. Vijchu Chantatab, an equity fund manager of SCBAM, said foreign investors were still looking to invest more in Asia including Thailand after worries on the US sub-prime crisis eased. As well, it is widely expected that the Bank of Japan is unlikely increase its policy interest rate after the US Federal Reserve cut its benchmark rate last month to help resolve the sub-prime mortgage problems. ''Several fund managers are now returning to obtain yen carry-trade loans again and invest in Asian equities. This will boost capital flows in this region and benefit the Thai stock market as well,'' Mr Vijchu said. The market gain would last until January after the year-end election. After that the SET is expected to move sideways until the new government announces its economic policies. Analysts agreed that the SET index would reach 1,000 points next year. Economic growth would be driven by private investment, local consumption and government investment, mainly in megaprojects. This year, earnings growth of listed firms is forecast at 8-9% and would rise to 15% next year. Local banks would be ready to lend more if local growth is higher. Mr Vijchu predicted that local interest rates would drop following the reduction of Fed fund rate. The Bank of Thailand held its 3.25% rate steady yesterday but is expected to reduce the policy rate once more before year-end. Kampol Adsavakulchai, a vice-president of SCBAM, said that when the deposit guarantee law took effect next year, depositors would gradually shift their savings to mutual funds. ''I think depositors will explore new investment alternatives and they will start investing in money-market or short-term bond funds first. When they are familiar with mutual funds, they will expand their investments to equity or foreign investment funds later,'' he said.
This year, SCBAM expects its assets under management to exceed 300 billion baht, up from 170 billion baht at the end of last year. Its total assets stand at 285 billion baht. For long-term equity funds, the company hopes to raise five billion baht this year.