Beware the end of March, warns Trinity Securities

Trinity Securities revised its SET index forecast to 1,800 points from 1,650 but cautioned investors to monitor possible foreign capital outflows by the end of the first quarter.

The concern is money may return to US stock markets.

Managing director Visit Ongpipattanakul said both internal and external factors support a bullish Thai share market coupled with news the Financial Action Task Force will withdraw Thailand from its blacklist by June.

However, the US fiscal budget sequestration cuts and the political situation in Italy are risks factors for the short term.

"If these risk factors intensify, global markets will feel the pinch including Thailand's," said Mr Visit.

Investors should also be cautious about trading near the end of this month, as foreign investors may shift their assets to the US, he said.

"The SET has been climbing rapidly in recent months, narrowing the return gap between the dividend index of the Thai market and the US. The difference between the SP dividend index and that of the SET is only 0.5%, the lowest in a decade," said Mr Visit.

However, he said since most foreign capital is flowing into the bond market, there is still potential for foreign investment in the SET, which may keep it at favourable levels.

Over the next 3-6 months, Trinity expects daily average trading will remain heavy at 50-60 billion baht, supporting brokers.

Mr Visit suggests investors wait to collect stocks when the market declines.

Conservative investors should hold a portfolio with cash of 30%, equities 40%, fixed income 30% and avoid gold. Aggressive investors should hold 10% cash, 60% equities, 20% fixed income and 10% gold.

Sukit Udomsirikul, the managing director and head of research of Maybank Kim Eng Securities (Thailand), said the broker will change its SET index projection method to be based on targeted price for each share rather than using price-to-earnings ratio (P/E), noting the new method more accurately reflects companies' fundamentals.

"The market right now has plenty of liquidity, so to forecast the index using only P/E concern may be difficult as many shares are trading at prices above their fundamentals," said Mr Sukit.

Earlier, the broker projected the SET would reach 1,550 points.

Source: http://www.bangkokpost.com/business/news/339536/beware-the-end-of-march-warns-trinity-securities