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Published on November 9, 2007

Standard and Poor's (S&P), however, is bullish that Asia-Pacific markets, including Thailand, remain attractive.

Thai shares were in turmoil from the opening bell on a selling spree in big-cap stocks as investors took a clue from the steep fall on Wall Street and other markets, fuelled by more bad news on the impact of the sub-prime crisis on US financial companies.

Morgan Stanley and US insurance giant the American International Group disclosed write-downs in the value of their assets from the mortgage impact.

The Dow Jones Industrial Average lost 360.92 points, or 2.64 per cent, its fifth-biggest fall of the year. The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 4.9 per cent at 5330.02. It was the index's biggest one-day drop since July 5 when it fell 5.3 per cent.

The SET Index took the least damage in the region. It closed the day at 873.64, off the intraday's trough at 864.66. Turnover was thin at Bt16.74 billion.

For Asia-Pacific equity markets, S&P's Equity Research predicts less room for values to move up next year after generally strong performances this year. Despite support from the continued strength in Chinese demand and wealth creation, equity markets in the region at current valuation levels are increasingly risky.

"Markets most likely to outperform next year are China H shares, Hong Kong, South Korea and Thailand. The Japanese equity market is expected to underperform," the international credit rating agency said.

It overweighted the SET and set the market's 2008 target at 1,020 points.

Siam City Securities' head of research Sukit Udomsirikul was bullish over energy stocks by predicting that crude oil would likely reach US$120 (Bt4,100) per barrel within the first half of next year on the anticipation of strong demand from China.

He said prices of commodities such as oil and coal were likely to escalate further for at least another year. The rising prices were mainly encouraged by high demand from China and also the weakening dollar.

Commodity stocks dominate the Thai market, as seen by the fact that the cumulative net profit of commodity-related listed companies accounts for almost 50 per cent of the market, Sukit said.

He forecast that the SET Index could reach 900 at the end this year and 1,000 next year, driven by increasing prices of commodity stocks.

"If we believe the Chinese economy will continue to expand, commodities prices are unlikely to decline. At the same time, China is the one that could dampen the commodity market," said the analyst.

He projected that crude-oil prices would rise continuously to more than $120 a barrel in next year's second quarter before declining in the third quarter when supply exceeds demand.

Anoma Srisukkasem, The Nation