After last year's 15.32-per-cent jump, the Thai stock index has little chance of another 20-per-cent increase this year, an executive of the Stock Exchange of Thailand said.
Referring to findings by the bourse's Capital Market Research Institute, Pakorn Peetathawatchai, the SET's executive vice president and head of its Corporate Strategy and Finance Division, said that aside from the high base last year, challenges this year remained as high as in 2014.
"The year 2015 will be as challenging as 2014 from negative external and internal factors," he said. "However, the index will tend to rise further thanks to the expected economic recovery in Thailand and the increased government spending on investment."
In 2013, the SET Index lost 6.7 per cent. The index ended 2014 at 1,497.67 points, with average daily trading of Bt45.47 billion (S$1.85 billion). Though the turnover dropped from Bt50 billion a year earlier, it remained the highest in ASEAN for the third year in a row.
Pakorn said that while external challenges in 2015 would be almost the same as last year, negative internal factors would differ. Among the events to watch out for is the possible election of a new government by the end of this year.
Kiatipong Ariyapruchya, the SET's vice president in charge of the Capital Market Research Institute, noted that among negative external factors was the uncertainty of the global economic recovery, particularly in Europe and Japan.
Moreover, it remains unclear how an increase in the benchmark US interest rate and monetary easing in Europe will influence global markets.
Pluses and minuses
He said the exchange would also experience a mixture of positive and negative factors.
Further delays in government investment could be another negative factor, though the market would benefit from the expected economic recovery as gross domestic product is expected to expand by 3-4 per cent.
Another positive factor, particularly for stocks in the logistics and construction sectors, is the slide in oil prices.
Last month, lower oil prices contributed to a 6.04-per-cent decrease month on month in the SET Index, in line with developments in global markets. Oil companies are expected to slash investment because of the low oil prices. The energy sector accounts for 20 per cent of total market capitalisation.
The market capitalisation of the SET and its second-tier bourse, the Market for Alternative Investment, ended the year at Bt14 billion.
On November 27, it hit Bt15.1 trillion, a record high since the market was established. As of yesterday, the market cap stood at Bt14.161 trillion.
Kiatipong noted that cheap oil should not hurt the index any further, as benefits - driven by domestic consumption - should outweigh the disadvantages.
According to the exchange, 36 companies and nine property funds were listed last year, raising Bt131.13 billion. Combined with Bt145.41 billion on the MAI, total fund-raising in the year stood at Bt276.54 billion, down by 18.77 per cent from 2013.
During the year, domestic institutional investors were net buyers, worth Bt69.61 billion, continuing from last year. Foreign investors were net sellers for the second consecutive year.
However, the net-sell amount significantly decreased from B194.70 billion in 2013 to B35.97 billion in 2014.