Market rallies as worries recede

       Thai stocks jumped 3.52% yesterday in a broad-based rebound as concerns about the health of His Majesty the King eased.
       The Stock Exchange of Thailand index closed at 717.12 points, up 24.4, in trade worth 29.77 billion baht. The index had fallen 7% over the previous two days on heavy foreign selling.
       Foreign investors, who were net sellers of nearly five billion baht worth of stock on Wednesday and Thursday,had a net buy position of 546.74 million baht. Local institutions were net buyers of 301.37 million baht in stock yesterday,while local investors were net sellers of 848.21 million. Energy stocks rose 3.66%yesterday, banks gained 3.05% and property stocks rose 4.14%.
       Analysts said market sentiment improved after Finance Minister Korn Chatikavanij urged investors to ignore unsubstantiated rumours and focus instead on the recovering Thai economy.
       He said regulators were investigating whether there was any concerted manipulation involved in the declines of the past week, which were touched off largely by foreign institutional selling on worries over the King's health.
       The Royal Household Bureau has stated that the 81-year-old monarch,
       who has been in hospital since midSeptember, is recovering steadily from a lung infection and was responding well to treatment.
       Thirachai Phuvanatnaranubala, the secretary-general of the Securities and Exchange Commission, said securities regulators were working with the police to pinpoint the source of the rumours that led to this week's broad sell-off.
       "For now, our preliminary investigation into the heavy declines [on Wednesday and Thursday] show nothing unusual suggesting market manipulation," he said."The selling was not focused on any one particular stock."
       Mr Thirachai said the SEC was asking local brokers for co-operation in the investigation.
       "Investors must exercise caution and use their own judgment when reacting to news. In any case, we believe that this problem has eased," he said.
       SET president Patareeya Benjapolchai said portfolio adjustments by institutional investors were also a key factor behind the correction this week.
       The SET index has been one of the best-performing markets in the region this year, gaining 53.95% since January.
       Mr Korn said the Thai economy was improving, with exports, tourism and corporate earnings all on the uptrend.
       The government is also taking steps to further develop the Thai capital market over the next five years, covering not only the SET but also the bond market, venture capital and other financial services sectors.
       Mrs Patareeya said a capital markets development fund would be established to support development programmes.
       The SET, with a market capitalisation of 5.7 trillion baht or around 60% of gross domestic product, is expected to rise to exceed the size of the Thai economy within five years, she said.
       Paiboon Nalinthrangkurn, chief executive of Tisco Securities, said the market rebound came as investor confidence strengthened because of the belief the rumours were false.
       "Market liquidity remains high. Further gains could come next week if there is no negative news," he said.
       Investors should monitor earnings reports in the US closely for cues on the direction of the markets.
       "I still think that the SET on a fundamental basis is overpriced. An index of 650 points would be more realistic.We can see how strong the correction was this week on negative news. If the market was closer to fair value, then the correction would not be this strong,"Mr Paiboon added.
       "I think investors should look forward and focus on the improved economy,"said Voravan Tarapoom, managing director of BBL Asset Management and head of the Association of Investment Management Companies."For BBLAM at least, we were net buyers over the past several days."