Bualuang Securities (BLS) has revised its year-end projection for the Stock Exchange of Thailand (SET) index down to 1,396 points, from a previous estimate of 1,466 points, citing expected volatility in the Thai bourse during the last four months of 2024.
Managing Director Chaiyaporn Nompitakcharoen attributed the lowered target to risks stemming from a slowdown in Thai exports due to easing economic growth among key trading partners, particularly the US, along with uncertainties in both global and domestic political landscapes.
“The Thai stock market’s returns in local currency this year are the worst among Asian markets,” he remarked.
While the SET decreased by 6.1% over the first eight months of the year, the Taiwanese stock market achieved the highest return at 25%, followed by Vietnam at 15% and Japan at 14%. In contrast, the Chinese market declined by 3.6% during the same period.
“The Thai stock market has underperformed for the past two consecutive years. In mid-2023, the index fell by over 10% as listed companies reported profits rising only 3% year-on-year in the first half, primarily due to slow government budget disbursement,” Mr. Chaiyaporn noted.
He pointed out that the proposed digital wallet scheme still faces challenges, while the new government must address the influx of low-cost products from China that impact Thai small businesses.
BLS forecasts the SET will trade at a forward price-to-earnings ratio of 15.60 times by year-end, with profits for listed companies expected to grow by 7.5% in the second half, driven by a recovery in tourism and exports.
“The year-end target does not take into account the digital wallet project, which is still in development and could be launched later this year,” he explained.
“Cash handouts are anticipated to have a short-term positive effect on the economy and the stock market, boosting GDP by 0.3 percentage points from the initial estimate of 2.6%. We hope to see further government stimulus measures to revitalize the Thai economy.”
Mr. Chaiyaporn also identified potential risk factors, such as the US-China trade war, which could escalate if the Republicans win the US presidential election later this year, potentially harming Thai exports.
BLS predicts that the Bank of Thailand may lower interest rates in the fourth quarter of 2024, while the Federal Reserve is expected to cut rates three times, totaling a reduction of 0.75 percentage points, as US economic growth slows. Additional rate cuts are projected for next year.
BLS has decreased the investment weight for risky assets to 20% of its total portfolio, down from 60-80% at the beginning of 2024, while increasing the allocation to combined short and long-term debt instruments to 80%.
The brokerage has also recommended reducing investments in the Vietnamese market from 13% to 9% and cutting exposure to the US from 12% to 6%. BLS has allocated only 2% to the SET, focusing on tourism and healthcare stocks.
