Thanachart expects volatile year for Thai equities, urges more selective approach to stock investmen

High volatility can be expected in the Thai capital market this year, which means that investors should spread their risk via stock investment in advanced economies, according to the company.

Meanwhile, the fund-manager expects to increase its assets under management (AUM) by 21 per cent this year as a result of new equity products and increased synergy with Thanachart Bank. 

Chotechuang Teerakajornchote, senior vice president for investment strategy at Thanachart Fund Management, said the theme that investors should keep in mind this year was to find both “high growth and high returns”. The company expects the Stock Exchange of Thailand Index to reach 1,650 basis points with a price/earnings ratio of 14-15 times and an earnings yield of 7-8 per cent by the end of the year, he said.

The SET Index is forecast to move within a range of 1,450-1,580 points until June, and to pick up in the second half of the year when the economic recovery is more apparent from the fruits of government spending and an increase in private investment, he said. “The Thai capital market is expected to be volatile this year from external and internal factors, such as the expected US interest-rate hike and internal political issues such as the prospects for the new charter and the upcoming election.

“We believe investors should be more selective, and they should try to spread their risk to places where the economies are currently picking up, such as the US and in the European Union, Japan and China, due to their economic-stimulus policies,” he added.

 

Media, ICT sectors to shine 

Looking at Thai stocks by sector, Thanachart expects the media sector, and especially digital-TV operators, to do well amid increased competition, while the ICT (information and communications technology) sector is expected to gain a handsome return from the 4G auction later this year.

Stocks in the financial sector are also expected to be attractive due to the introduction of nano-financing, while the airline industry – in which 40 per cent of expenditure is on fuel – and the logistics sector are expected to post high profits this year, as global oil prices have fallen by 50 per cent.

Thanachart believes there are also stocks in the energy sector that are still worth looking at, such as some of the country’s oil refiners, which have also benefited from falling oil prices, while sectors such as food and beverages with strong investments abroad should also do well this year.