Asia-Pacific News

Thai Stocks Set to Hit 1,100 in 2011: Experts

Adeline Ee, CNBC Asia Pacific
Bullish on Thailand

Thailand's stock market is poised to climb higher over the next three to four months and could cross the 1,100 mark next year, various experts told CNBC on Wednesday.

"The fundamental story for the economy is strong," said Ian Gisbourne, head of Thailand equity research at UBS, adding that exports, tourism and agriculture were all doing extremely well.

Exports have jumped 400 percent since 1995, with exports of vehicle and car parts  skyrocketing 3,000 percent, he said.

"We believe it (the SET) should cross 1,000 points (this year)," Montree Sornpaisarn, CEO of Kim Eng Securities said in a CNBC interview. "Next year, it could be 1,100 points."

The Thai market, which has risen 30 percent since the political unrest in May, has further room to grow with the return of foreign money, Gisbourne continued.

"Foreign investors have started to come back into this market and that is obviously potential to propel the markets to a slightly higher level," Gisbourne continued.

Growth Slowdown Could Limit Gains

Other experts, however, cautioned that with an expected slowdown in gross domestic product next year, the market could see some volatility.

Thailand's SET to Hit 1,000 This Year

"Export growth is definitely going to slow down and if the investment cycle does not run through or we do not see any significant government spending, that's one reason (GDP next year) is going to be around four to five percent," said Vikas Kawatra, head of institutional broking at Kim Eng Securities on CNBC.

Given the lower GDP projection compared to 2010's 7.5 percent estimate, earnings growth of around 10-12 percent next year looks difficult to achieve, Vikas added.

Part of the reason for the SET's rise is attributed to retail speculation, he noted, and a turn in sentiment could change the picture.

"If the retail investors turn negative because of the political events, or if something goes wrong on the local front, foreigners will be the first to pull out," Vikas warned.

Volatile Outlook for Thailand: Trader

"It's kind of difficult to go for the bull case," he said.

Bet on 'Real Economy' Sectors

Vikas, however, said he was bullish on 'real economy sectors' like banks, tourism, energy and the telecoms sector.

While the banking sector is not likely to sustain its current 20 percent growth next year, Vikas remained positive, saying he sees "a lot of growth" there, as consumption has been picking up.

"Growth for this year has largely been driven by some of the banks financing the exporters, so if the commodity prices pick up next year, there'll be more need for working capital."