Thai equity forecast buoyed by many favourable factors
The Stock Exchange of Thailand last year was marked by multiple rounds of volatility.
The political situation notably suppressed investment in the first half of the year. The SET Index rebounded to 1,603.89 points, only to be bogged down by the plummeting world oil price, which tumbled in December and lowered the index to 1,497.67 points at year-end, well below the 1,600 points predicted by many.
For 2015, the Thai equity outlook remains positive with many favourable factors. First of all, Thai gross domestic product is expected to grow by 4 per cent, compared with 0.8 per cent estimated for 2014.
Other positive factors consist of political stability, economic stimulation, and government spending through many infrastructure projects, the advent of Asean Economic Community and lower world oil prices, which are believed to boost household spending.
All in all, the SET Index has been predicted to rise to 1,600 points this year, ranging between 1,581 and 1,664 points. The market price-to-earnings (P/E) ratio should be 15-16 times. The rate of growth in net gains among SET-listed companies should be 14-18 per cent. With the push of the right factors and government spending on schedule, we might see the SET Index touching 1,600 points.
Risk-takers may adjust their equity portfolios by gearing around 20 per cent to Thai stocks.
The prominent sectors that might yield interesting gains include construction services and materials (bound to be boosted by government spending in building basic infrastructure), the real-estate sector (higher in demand and growing along Skytrain routes), the transport and logistics sectors (which would benefit from lower oil-price-based costs), the food and beverages sector (which thrives on the softer baht), and the information and communications technology sector (which benefits from the digital economy and the coming auction of fourth-generation bandwidth, and is scarcely affected by a turbulent market anyway).
However, investors need to keep an eye on such risk factors in the Thai stock market as the high level of household debt, delayed government spending, and the shape of the global economy. To elaborate, if the world economy gets more sluggish than predicted, or is complicated by the likes of a Russian economic decline or the US interest-rate rise, it will send the Thai stock market into another round of turbulence and slowdown.
Investments contain risk. Investors should study the prospectus before making any decision.
Asset Plus Fund Management
contributed this article .
