After riding global optimism and strong domestic demand to breach the 1,600-point psychological barrier for the first time in 19 years on Tuesday, Thai stocks' momentum gathered steam yesterday, sending the Stock Exchange of Thailand (SET) Index to an intraday peak of 1,621.40 before closing 13 points or 0.81 per cent higher at 1,614.15.
The SET extended its year-to-date gain beyond 15 per cent even though foreign investors have remained net-sellers.
Thanachart Securities sees the SET hitting 1,630 points this week on its way to 1,700 by year-end. It attributed the spike to potential improvement in quarterly results of listed companies, which may lead to upward earnings revisions for several stocks, particularly those benefiting from domestic demand.
In its research note, Phillip Securities (Thailand) said it expects the upbeat data from the US, and the European Central Bank's rate cut, to further boost appetite in risk assets this week.
Last month, 165,000 more people were enlisted on the US non-farm payrolls, bringing down the unemployment rate to 7.5 per cent from 7.6 per cent in the previous month.
The ECB last week lowered the reference rate by a quarter percentage point to 0.50 per cent, with commitment to further stimulus. Australia's central bank also shifted the reference rate down a gear on Tuesday, and there is a 50-per-cent chance for another rate cut in July.
China's surprising trade surplus of US$18.2 billion (about Bt534 billion), after a rare trade deficit in the previous month, added to the euphoria.
Global markets have been heading for new highs in recent years on firming anticipation that stimulus would continue to lift the global economy out of the current gloom.
The Dow Jones Industrial Average on Tuesday added 87.31 points, or 0.6 per cent, to 15,056.20. Asian stocks advanced for a third day, with the regional benchmark index rising to a 5-year high. Japan's Nikkei 225 Stock Average climbed 0.7 per cent, extending the new high in four-and-a-half years.
The MSCI Asia Pacific Index edged up 0.9 per cent yesterday to 143.37 as of 5pm in Tokyo (3pm Bangkok), with all 10 industry groups rising. The measure has increased 9.8 per cent so far this year amid speculation the Bank of Japan will deploy more measures to beat deflation as policymakers in the US and Europe remain on standby to buoy growth.
"Markets are driven by heightened stimulus," said Matthew Sherwood, Sydney-based head of investment market research at Perpetual, which manages about $25 billion.
"Economic data remain in the Goldilocks range - weak enough to warrant continued stimulus, but strong enough to keep earnings expectations positive," Sherwood said.
Of the 123 companies on the Asia-Pacific gauge that have reported quarterly earnings in the past four weeks, and for which Bloomberg has estimates, 54 per cent have missed projections, according to data compiled by Bloomberg.
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Article source: http://www.thethailandlinks.com/2013/05/09/stock-market-continues-gains-on-global-bullishness/
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