The Thai capital market continued to rise in Q1/2011, with The Stock Exchange of Thailand (SET) Index closing at 1,047.48 points at the end of Q1/11, up 1.43% from end-2010 and 6.03% higher than from end-February. Trading growth in Thailand was still favorable especially when compared to some other exchanges which have closed lower at the end of last year. Foreign investors posted a net buy of THB19.54 billion (approx. USD653.19 million) in March, with apparent weight given to the energy sector when oil prices were rising and to banking stocks due to higher interest rates.
The rise in the SET Index has driven market capitalization to THB8.49 trillion (approx. USD283.79 billion), a 1.84% increase from end- 2010. However, the SET’s forward P/E ratio at end-Q1/11 fell to 12.38 times compared with the 14.72 times recorded at end-2010 as the forecasted earnings per share (EPS) of listed companies in 2011 is expected to rise by around 20% from 2010, making investment in SET listed firms more attractive than before. The daily average trading value on both the SET and Market for Alternative Investment (mai) in Q1/2011 was THB31.26 billion (approx. USD1.04 billion) or a 14.46% quarter-on-quarter (q-o-q) fall. Trading in derivatives saw a daily average volume of 27,226 contracts, or a 15.51% q-o-q rise, due to an increase in 10-baht gold futures trading by 59.13% from the preceding quarter.
The SET Index closed Q1/2011 up 1.43% from end-2010, even though it experienced a steep fall in January as funds moved from emerging markets to those that are expected to benefit from the US economic recovery as well as a series of negative factors hurting the confidence of global investment, such as the unrest in the Middle East and North Africa in February, which drove world oil prices significantly higher, and the massive earthquake and tsunami in Japan in March. However, both factors only had a brief impact on global stock markets, including the SET.
In March 2011, the SET Index went up 6.03% from the preceding month due to the return of foreign investors as the market’s net buyers of THB19.54 billion (approx. USD653.19 million). This is similar to the situations seen in other regional markets, where foreign investors also ended up as net buyers. Meanwhile, the mai index closed at 279.53, or 2.47% higher than at end-2010. Most sectoral indices also rose, with the Resources and the Financials groups topping the list with 4.79% and 3.89% increases from end-2010, respectively.
Higher securities prices also led the SET’s market capitalization at end-Q1/2011 upwards to a total of THB8.49 trillion (approx. USD283.79 billion), a 1.84% rise from end- 2010, while the mai’s total market capitalization stood at THB55.96 billion (approx. USD1.80 billion), a 1.53% increase from end-2010. Even though prices have gone up, the SET’s forward P/E ratio dropped over Q1/2011, because forecasted earnings per share of listed companies in 2011 is expected to increase by around 20% from 2010. When compared with Q1/2010 and after the adjustment of the earnings per share forecast, the Thai bourse’s forward P/E ratio has increased from 11.84 times recorded at the end of Q1/10. However, the SET continues to provide the highest rate of dividend yield in the region, at 3.67% which is also up by 3.56% from end- 2010. The mai’s dividend yield was 4.10% at end-Q1/2011, slightly lower than the 4.20% at end-2010.
Daily average trading value of SET and mai in Q1/11 was THB31.26 billion (approx. USD1.04 billion), a 59.42% y-o-y rise but a 14.46% q-o-q fall. Foreign and institutional investors increased their share of total trade to 24.07% and 9.50%, respectively, from 16.90% and 7.80% in the preceding quarter. Moreover, the foreign investor’s share of trading in Q1/2011 was the highest in 10 quarters, when the subprime crisis hit the world in Q4/2008. In Q1/2011, foreign and retail investors posted net sells of THB710.70 million (approx. USD23.74 million) and THB1.54 billion (approx. USD51.52 million), respectively, while local institutions reported a net buy of THB1.19 billion (approx. 39.62 million). In March 2011 alone, the daily combined average trading value of the SET and mai was THB29.63 billion (approx. USD990.70 million), an 18.76% y-o-y increase and a 5.36% m-o-m rise. At the same time, foreign investors turned to be net buyers of THB19.54 billion (approx. USD653.19 million) while retail investors posted a net sell of THB32.07 billion (approx. USD1.07 billion).
Turning to Industry Groups in Q1/2011, the Banking Sector had the biggest rise in trade value vis-à-vis the other sectors, jumping to 21.63% of total trade from the 14.73% seen in the preceding quarter. In Q1/2011 as a whole, investors were most interested in the 10 largest securities in terms of market capitalization, as these shares accounted for 41.80% of total trading in Q1/2011 vs. 32.57% in Q4/2010. However, in March, investors turned to small-cap stocks, as the top-10 big-cap securities fell to 38.52% of all trading from the 45.59% recorded in February 2011 while trade in non-SET50 increased from 18.92% in February to 24.04% in March.
In Q1/2011, derivatives traded a daily average of 27,226 contracts, or 15.51% higher than in Q4/2010, due to the popularity of 10-baht gold futures, whose share of all derivative trades soared by 59.13% and of SET50 Index Futures, whose share rose by 21.44% from the preceding quarter. In March alone, the daily average trading volume was 29,469 contracts, with an almost across-the-board increase, except for the 50-baht gold futures, which saw a small fall. The 10-baht gold futures also recorded a continuous rise in its daily average trading volume to 4,017 contracts, the highest since its trading commenced in August 2010.
Capital-raising in Q1/2011 by listed firms through the equity market reached TH41.08 billion (approx. USD1.37 billion). Vintage Engineering PCL (VTE) was the only company that used the primary market to raise funds, bringing in THB32 million (approx. USD1.07 million. Two property funds, Dusit Thani Freehold & Leasehold Property Fund (DTCPF) and Trinity Property Fund (TNPF), raised THB4.09 billion (approx. USD136.88 million) and THB710 million (approx. USD23.74 million), respectively. Seasonal equity offerings (SEOs) raised THB36.27 billion (approx. USD1.21 billion). Most of the SEO funds were raised by Indorama Ventures PCL’s taking in THB17.29 billion (approx. USD577.70 million) to expand its petrochemical business. In March 2011, SET-listed firms have raised a total of THB3.30 billion (approx. USD110.63 million) through the equity market.
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