Thai shares yesterday rose to a six-month high on a buying spree by foreign investors across the region ahead of mid-term congressional elections in the United States.

Buying pressure by local institutional investors also gave a boost to the market. They have been snapping up Thai shares since early this month, after selling a net Bt20 billion over the past four months.

The SET Index yesterday closed 0.54 per cent higher at 738.90, off the day's peak at 743.31 due to profit-taking. Turnover was brisk at Bt21.45 billion. Foreign investors have snapped up Thai shares with a net position of Bt24.26 billion since the September 19 coup.

The index reached a year's high of 746.45 during trading on May 22.

Banking, property and energy stocks were at the centre of the rally. Krung Thai Bank rose 2.21 per cent to Bt13.90, Bangkok Bank ended 1.67 per cent higher at Bt122, and Kasikornbank increased 1.4 per cent to Bt72.50.

LPN Development hit a record high, with a 5.75-per-cent rise to Bt5.50.

An influx of capital from outside the region was cited in many markets for supporting the surge which resulted in Hong Kong, Sydney, Singapore, Jakarta and Wellington all closing at record highs.

Manila struck a fresh nine-year high, while Kuala Lumpur was trading at its best level in six years after cracking the 1,000-point barrier, and Shanghai was trading at its highest level in five years.

The Dow Jones Industrial Average on Monday rose 119.51 points, or one per cent, to 12,105.55.

Thai banking shares have surged significantly since the coup. Bangkok Bank has risen almost 8 per cent, Siam Commercial Bank by 9.5 per cent, Kasikornbank by 7.4 per cent, Bank of Ayudhya by 10 per cent, and Krung Thai Bank by 16 per cent.

Sukit Udomsirikul, assistant managing director of Siam City Securities, said investors had jumped on the bandwagon to snap up shares across Asia ahead of the mid-term congressional election in the US.

"It is short-term speculation. If the vote's outcome is in line with the market's expectation, that the Democrat Party will control the majority of seats after the poll, they speculate that the US dollar will depreciate further," he said. "I expect to see a December effect, particularly in banking stocks."

The December effect is a phenomenon in which foreign investors go on a buying spree in shares during the month.

However, Sukit precicted that the SET Index would hover at around 750 points.

KGI Securities (Thailand) vice president Adisak Kammool said the Thai stock market would be highly volatile, like its regional peers, despite the influx of capital.

Siriporn Chanjindamanee

The Nation