BANGKOK, Nov 29 (Reuters) - The Thai stock market could rise as much as 37 percent, to 500 points, in the coming year on the back of an improving global economy, but tensions in the Middle East will present a major risk, analysts said on Friday.
Domestic political stability and banks' excess liquidity and low interest rates will remain major drivers for the Thai bourse, analysts and fund managers say.
The property, building, finance, automobile and entertainment sectors will be the biggest beneficiaries of the domestic consumer spending boom and are likely to continue to outperform the market in 2003.
"Next year, I think the market will be on a bull run, but it may not be a crazy one," Sombat Narawuttichai, executive vice president at Ayudhya Securities, told a seminar on the outlook for the Thai stock market.
The benchmark Stock Exchange of Thailand composite index (SET) was trading around 364.9 by the close on Friday. It has gained nearly 20 percent this year, making it Asia's third best performer after Karachi and Colombo.
Sombat said besides improvements in the global economy next year, rosier domestic growth would lift the market. Thai government agencies have forecast 4.5-4.8 percent economic growth in 2002. The Thai economy grew only 1.8 percent last year.
"If external and domestic factors remain favourable, we should see the index touching 500 points next year," said Montree Sornpaisarn, chief executive officer at Kim Eng Securities, Thailand's largest retail brokerage.
Among analysts' top picks were Asian Property Plc , Land and Houses , Thailand's largest industrial conglomerate, Siam Cement Plc , and Yuasa Battery .
Fund managers said they also liked Tisco Finance , Seamico Securities , television operator BEC World , music firm GMM Grammy , cinema chain Major Cineplex and United Broadcasting Corp .
Fund managers said they were still worried about a possible war between the United States and Iraq, however.
"Foreign investors are likely to come back into emerging markets next year," said Supakanya Visetbhakdi, fund manager at AJF Asset Management, which manages more than 60 billion baht ($1.38 billion). "But if there is a war...the (Thai) market will certainly be hit."
SET President Kittiratt Na-Ranong said the market regulator was studying the possibility of adjusting trading hours next year in line with regional bourses. ($1=43.39 baht)