The Stock Exchange of Thailand (SET) is seen rallying after the long Songkran festival in the wake of persistent offshore fund inflows amid uncertainty over US economic policy, overweight recommendations in emerging markets by some foreign funds, and better-than-expected first-quarter earnings of Thai listed companies, analysts say.
Sentiment is bullish for large-cap stocks as they are always the targets of foreign investors' buying sprees in an early stages of fund inflows, said Sompong Benjatapanan, research manager at Aira Securities.
Foreign investors were net buyers of 7 billion baht in Bangkok Bank on April 11, while purchases totalling 5 billion in Berli Jucker Plc recently added to signs that fund inflows will continue, he said.
"It was a signal foreign investors are looking at Thailand again after they cashed out in March," Mr Sompong said. "They are speculating that Thai listed firms will deliver good earnings in the first quarter, and that banks and consumer stocks will have good growth potential."
Foreign investors poured 1.33 billion baht into Thai equities this month, raising their net buy to 7.6 billion this year.
He said geopolitical tension regarding Syria and North Korea has engulfed the US, China and Russia, creating risk that warrants close monitoring.
Viwat Techapoonphol, deputy managing director and head of technical analysis at Tisco Securities, said overseas funds would keep flowing to emerging markets, where market valuations remain cheap.
The Thai stock market should benefit from the trend, he said, as Thai shares' valuations are still attractive for medium- to long-term investment, while US stocks are overvalued and European markets are feeling the pressure from worries over Brexit.
The SET index could reach 1,600-1,605 points during April and May, he said. There is some upside potential for the Thai stock market as it rose only 2.3% in the first quarter, compared with a global average gain of 6%.
"Tisco expects banks will be the target of foreign investors' buying spree in this round on anticipation of 12% earnings growth in the first quarter," he said.
Construction and building materials, as well as tourism, are other sectors to benefit from fund inflows, Mr Viwat said.
But the stronger baht will pose a threat to export stocks and the country's economic growth if the currency remains firmer in the long run, he said.
Meanwhile, global gold prices are expected to move in a range of US$1,245-1,275 an ounce this month because of rising risks from terrorism after sabotage in several countries in Europe and the Middle East and growing geopolitical tension, said Nuttawut Wongyaowarak, an analyst at Globlex Securities.
The precious metal is currently a good bet as rifts will give a boost to gold prices in the medium term, he said.
His comment mirrored a higher Gold Confidence Index in April. The quarterly index surveyed 10 leading gold traders, rising to 61.35 in the second quarter from 60.03 in the previous period.
The 10 traders forecast gold prices will trade in a range of $1,211-1,300 an ounce this year, while the local gold price will trade in a range of 19,500-21,500 baht per baht weight of gold.