Bangkok, Thai stock market in Q3 "NEXT LEVEL" returns to stand above 1350 points, supported by listed company profits - Uptick measures - ThaiESG new conditions, recommending stocks that benefit from economic stimulus policies and high interim dividend stocks. Research Department of Asia Plus Securities Co., Ltd. (ASPS) in Asia Plus Group Holdings Co., Ltd. (Public) or ASPS assessed the overall investment of the Thai stock market in the third quarter as having a chance to pass the lowest point after starting to see many factors supporting the Thai stock market, both external factors where the global economic picture looks relaxed from the risk of entering a recession amidst the clear downward cycle of global interest rates, especially in 3Q67, it is believed that this will help reduce the pressure on the exchange rate, supporting the baht to be more stable and gradually stronger, and domestic factors starting from concerns about the political situation, there may be less pressure after the legal cases start to show a clearer process, while the Thai economy BOTTOM OUT from many sectors, whether it be government spending (G), investment sector (I), including consumption sector (C), is expected to help Thailand's GDP GROWTH gradually grow step by step. For the whole of 2567, the BOT expects GDP GROWTH to be at +2.6% YoY. Terdsak Thaweetiratham, Deputy Managing Director of Research, Asia Plus Securities, added that even though interest rate cuts in Thailand may not happen this year like in other countries, in the third quarter, the Thai stock market is still more attractive for investment due to several factors, as follows: 1. The profit angle of listed companies in 2Q67 has the opportunity to grow significantly YoY from the profit base in 2Q66 which is lower than normal and stable QoQ along with profit from exchange rates. And the high oil price supports the possibility of 2Q67 profit being in the range of 230,000 - 270,000 million baht. 2. In terms of SET Valuation, we will see an important fundamental support le vel at 1,300 points, with a PER67F of 14.2 times (-1SD in 10 years) and the lowest level after the COVID crisis in 2020, while in terms of PBV, it is 1.2 times (-2SD in 10 years), Dividend Yield 3.5% (+1SD in 10 years). 3. The SET's confidence-building measures, starting from July 1, 2024, announced the use of the UPTICK RULE rule for all companies, which significantly reduces SHORT SELL transactions, plus the expectation of money from THAIESG, new conditions, which may flow back to support the stock market by 60,000 - 70,000 million baht and encourage funds to reduce their cash position and buy more stocks in their portfolios for the rest of the year. There is also a trend to revive the Vayuphak mutual fund with a guaranteed minimum return to further support the Thai stock market. Investment strategy: Recommended stocks with good fundamentals, supported by new THAIESG money, with 2 main themes: 1. Stocks that benefit from the government's economic stimulus policies, AOT, CK, and 2. High interim dividend sto cks, SIRI, ADVANC, TTB, TU. Thai bond market in Q3, Thai bond yield forecasts are still Sideway Down. It is recommended to gradually buy investment grade bonds. The secondary market product team, Asia Plus Securities (ASPS), assesses that the overall investment in the Thai bond market is still going well and is in demand by investors, especially Thai bonds with short maturities and credit ratings of Investment grade or higher. Data from the Thai Bond Market Association (ThaiBMA) shows that at the end of Q2 2024, the Thai bond market had an outstanding value of 17 trillion baht, expanding by 2.7% from the end of last year, mainly from the increase in bonds issued by the government. In terms of issuance of long-term private sector debt instruments (Long-term bonds) are worth 494,371 million baht, of which 95% is the issuance of bonds in the investment grade group, while the remaining 5% is the high yield group. It is further noted that the issuance of this group is in the form of secured bonds, accounting for a high proportion of 81% for the first half of 2024, up from 48% in 2023, and with an average issuance period of 2.2 years, down from 2.5 years in 2023. Foreign investment flows (Fund flow) of foreign investors in the first half of 2024 were net sales of Thai debt instruments in both the first and second quarters, totaling a cumulative net sales value of Thai debt instruments of 66,514 million baht, partly due to the Fed maintaining the policy interest rate at a higher level for longer than expected, coupled with the inclusion of Indian government bonds in the calculation of the JP Morgan Emerging Markets Bond Index (GBI-EM), which will result in a decrease in the proportion of Thai debt instruments in the index. Lapporn Panakul, Director of Secondary Market Products, expects that the bond market in the remaining quarters of this year, Thailand's yield curve will still move sideways down. According to a survey by ThaiBMA, most market participants expect the MPC to maintain the policy interest rate at 2.50% in 2024, with 43% expecting a chance that the MPC will cut the policy interest rate in December, the last meeting of the year. In early July, we began to see more flows of long-term bond purchases, with the government bond yield curve adjusting downward in line with the US government bond yield. Most investors still consider bonds in the market to be a stable and safe option. Therefore, the appropriate investment strategy during this period, under the current high interest rate market but with a tendency to decrease in the future, is to gradually accumulate and buy bonds, whether through the primary or secondary market, or invest through domestic and foreign bond funds, which can extend the investment period, such as 5-7 years. If interest rates start to decrease at the end of this year or early next year, investors will benefit from the increased price because the market returns have decreased, or in other words, there is an opportunity to sell for profit in the future. In the first half of the year, the in vestment portfolio recommended by the foreign strategy department of Asia Plus Securities gave a return since the beginning of the year of 15.47%, with most of the return coming from stocks in the United States, such as 7Magnificent, Semiconductor, and Ai Theme, but there are also many other markets that have given good returns, such as Japan, India, and Vietnam. The important question is, will the same group of stocks remain the market leaders in the remaining time of the year? The direction of the US stock market depends on the financial statement announcement, the interest rate cut by the US Federal Reserve (Fed), which is currently expected to cut interest rates for the first time in September, and the US presidential election that will take place in November. Source: Thai News Agency
Sunday, September 08, 2024