According to data from the Stock Exchange of Thailand, Credit Lyonnais Securities, whose market share was 5.17 per cent in 2006, jumped to 8.74 per cent in the period from January to last week.

Phatra Securities expanded to 6.86 per cent from 5.83 per cent, DBS Vickers Securities rose to 6.31 per cent from 2.89 per cent, and UBS Securities went up to 5.82 per cent from 4.66 per cent.

Foreign investors posted a net buy of Bt47.06 billion from January to last Friday.

Paiboon Nalinthrangkurn, managing director of Tisco Securities, said the stock market would look more positive in the second half of this year. Many markets in the region have recorded new highs, excluding those in Thailand, Taiwan and the Philippines.

"The Thai market could rally by around 61 per cent from the current index over the next few years. Foreigners are likely to flow their investments into the market as the other markets have already broken their records," said Paiboon.

He added that next year brokerage industry earnings would climb by up to 15 per cent, compared to the zero growth expected this year. This is due to the good signs of a general election and the trend of falling interest rates.

Last week rumours spreading through the stock market about the resignation of Prime Minister Surayud Chulanont and profit-taking in banking and telecommunications sectors eroded investor confidence and sent shares to close in negative territory after the continuous hike of previous weeks.

However, analysts warned that this week would be critical for the stock market. If the index can stay beyond 710 over the next fortnight, it can probably flow through to 770.

Adisak Kammool, vice president for economic and strategy research at KGI Securities (Thai-land), said that at 710, the price-to-equity (P/E) ratio would be 11.

"This would be the first time in four years that the market has traded at this ratio," he said.

He explained that the index drop on Friday had mainly been due to political uncertainties, including the recent bomb in front of Rajavithi Hospital. Profit-taking in banking and telecom sectors were also factors.

"The P/E ratio in the banking sector is 14. Given that banks' profits are likely to drop, investors, especially those who don't want to hold any stock longer than six months, sold their stocks. The profit-taking in the telecom sector was due to the recent ruling on excise tax."

Warut Siwasariyanon, Globlex Securities' vice president for research, said market fluctuation would remain until the general election. He added that the rumours had occurred on the day when other Asian markets and Wall Street were correcting after setting record highs.

"The rumour about [Surayud's] resignation has been spreading for quite a while. There are also other political rumours that have caused market volatility," Warut said.

"The market will continue to be up and down like this. Technically, analysts think that 700 points is the support barrier, but if anything serious happens as a result of political movements, the index will definitely not be able to move above 700 points."

JP Morgan Securities (Thai-land) managing director Marco Sucharitkul said his company's European customers were concerned only about political issues such as the acceptance of the constitution and the general election.

Siriporn Chanjindamanee,

Piyarat Setthasiriphaiboon

The Nation