The Securities Analysts' Association (SSA) believes the stock market will experience a "January effect" next year.

The January effect describes a rush by foreign investors to snap up shares that often occurs during that month. The likelihood it will happen next year increased after the Dow Jones Industrial Average recently marked a milestone by reaching 12,000 points for the first time.

SSA secretary-general Sombat Narawutthichai said yesterday 90 per cent of analysts surveyed forecast that the prevailing foreign buying spree in Thai shares would last a long time. Favourable factors cited were the stable interest rate, weakening oil prices, continuing capital inflows, the improved political sentiment and appreciation of Asian currencies against the US dollar.

Since the September 19 coup, foreign investors have bought a net Bt18.24 billion worth of stocks.

The Stock Exchange of Thailand (SET) Index rose yesterday almost 0.5 per cent to 728.53 points on moderate turnover of Bt13.91 billion.

The association's survey covered 20 brokers in Thailand.

Analysts urged the government to make clear its policies on corruption problems, nominees, political reform, economics, capital markets, speculative stocks, infrastructure mega-projects and the income gap between rich and poor.

Building up foreign investors' confidence was another request.

Sombat said analysts had become more optimistic since the previous survey was conducted last month, as seen by the improvement in the consensus forecast for growth in the gross domestic product (GDP) this year from 4.2 per cent to 4.4 per cent.

He said the bottom of the range of analysts' estimates for economic growth in the current survey went from 3.8 per cent to 4 per cent.

But earnings per share this year was seen as falling behind GDP growth, going from a 0.7-per-cent contraction in the previous survey to a 0.9-per-cent increase.

GDP next year would most likely stay at 4.5 per cent, while the best and worst scenarios were 5.1 per cent and 3 per cent, respectively.

The baht was predicted to be at 37.70 to the dollar by year's end and 37.40 next year.

The 14-day repurchase rate next year is expected to be 4.7 per cent.

The composite SET Index is expected to stand at 744 points this year and 799 next year.

Real estate, banks and energy are the most attractive stocks in analysts' eyes for this quarter.

Real estate will benefit from the stable interest rate, falling oil price, recovery of consumer confidence and the three soon-to-be-constructed rapid-train routes.

Siriporn Chanjindamanee

The Nation