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Non-Tech : Thai Banking Sector-Has the Recovery Begun? -- Ignore unavailable to you. Want to Upgrade?

To: DEMON VIII who wrote (2)	10/29/1998 8:18:00 AM
From: Lorare	Respond to of 17

Hi Demon, I think most of us are and should be, but newclips like the following are, in my view, "ringing the bell" Thai markets jump on recovery hopes By Chris Johnson BANGKOK, Oct 29 (Reuters) - Thai financial markets surged on Thursday amid a wave of speculative buying on hopes that the beleaguered economy might be on the brink of recovery. The Stock Exchange of Thailand (SET) saw its busiest day for eight months with more than 12 billion baht ($326 million) of deals as the benchmark SET composite index rose almost 4.5 percent. Trade was dominated by small investors, but their enthusiasm was bolstered by increasing interest from international funds. The baht traded at new 12-month highs under 36.70 to the dollar and looked set to test resistance at 36.50 before the Bank of Thailand intervened to buy dollars late in the Asian afternoon, dealers said. Analysts said action on the stock market was mostly driven by speculative trade. About 70-80 percent of the liquidity was provided by hundreds of retail investors, speculators anxious to cash in on a rally that has pushed the share market up by almost a third in just two months, they said. But behind these small buyers were the big guns of the international funds, who have been reweighting Thailand in the light of a series of macroeconomic improvements. "A lot of this rally is based on buying by small investors and may not last," said Jeff Earhart, senior analyst at Seamico Securities in Bangkok. "But important things are happening in the economy. Interest rates are coming down fast, the baht is rising, and, as the debt burden of Thai companies eases, a lot of the valuations of local companies are beginning to look too low," he said. By Thursday's close, the SET composite share index was up 14.62 points, or 4.42 percent, at 345.07. The local Thai banking sector index rose 11.96 percent, the finance index was up 11.45 percent while the property index jumped 12.62 percent. The banking sector was led by state majority-owned Krung Thai Bank and by Bank of Ayudhya, which jumped 1.75 and 2.00 baht to 14.75 and 13.50 respectively. Burdened by heavy foreign debt, many Thai companies have become technically bankrupt over the last year as rapid economic growth has given way to recession. The Thai economy is expected to contract by at least seven percent this year, after a 0.4 percent decline in 1997, and will do well to stabilise in 1999, analysts say. But economists say investors are right to look again at Thai stocks. Interest rates have now fallen a long way from their peak in mid-August as liquidity in the money market has risen. Overnight money market rates fell to just 4.00 percent on Thursday, down from 5.00 percent on Wednesday and a high of 11.50 percent two months ago. Finance Minister Tarrin Nimmanahaeminda said on Wednesday the lower trend was "permanent" and the country's biggest bank, Bangkok Bank, announced on Thursday it would cut its minimum lending rates to 13.25 percent from 13.75 percent in November. All this has helped the Thai baht strengthen steadily from its low of around 56 to the dollar in January. The baht has risen 13 percent over the last two months and traded at a 12-month high of 36.66 to the dollar on Thursday before central bank buying pushed it back down to 36.80. The stronger the baht, the smaller the foreign currency debt burden on Thai corporates, analysts say, and the baht still looks set for further gains. "Technically I would say we might see Thai baht getting much stronger -- maybe heading for 35," said Satian Tantanasarit, senior vice president for treasury at Thai Danu Bank. "I would say Thai baht can get much stronger." ($1 = 36.8 baht) 07:28 10-29-98