Foreign capital outflows could pressure SET Index
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Therdsak Thaveeteeratham Executive Vice President Research Department Asia Plus Securities SINCE late April onwards, the SET Index has stayed in the mode of corrections amid concerns over slower-than-expected economic recovery. Thus, ASP Research h
Such a high growth estimate will be proven by first-quarter earnings.
Up until Friday, listed companies are required to submit their first-quarter financial statements.
ASP Research still believes the combined net profit will be higher than Bt200 billion.
About Bt150 billion of that figure could come from four major industries – commercial banking, energy, communications and construction materials.
In the first quarter, gains from extracurricular items were recorded by several companies like JAS, TRUE and SCC. Foreign exchange
gains were also registered.
This, coupled with uncertainties over the economic recovery in the latter half of 2015, has prompted us to follow the likely analyst review of EPS growth estimates after the announcement of first-quarter earnings. If the estimates are cut as expected, the target for the SET Index will also be lowered.
One more interesting point is the interest-rate direction after the Monetary Policy Committee slashed the policy rate two consecutive times to 1.50 per cent.
ASP Research believes it is possible the policy rate will be cut to 1.25 per cent for the rest of the year.
This downward trend has pressured bond yields to be lower and the baht to depreciate.
The stock market is also concerned over foreign capital outflows, which could prompt the SET Index to drop.
Taking foreign holdings of Thai stocks into consideration, it is not as bad as it appears.
Presently, foreign holdings of Thai stocks has been lowered to below 32 per cent, which is lower than normal. The high was 37 per cent.
Net accumulated buying of Thai stocks at market prices fell from Bt320 billion in mid-2013 to only Bt36 billion now.
It is believed that foreign selling will not put much pressure on the stock market.
If there are no other negative factors, the market corrections will be limited in this round.
At the current SET Index of 1,493 points, the stock market could find a strong support level.
However, if the SET Index falls below that level, there would be a buying spree from long-term investors.
Money could be moved into stocks with sound fundamentals and high-dividend yield (higher than 4 per cent) and no much volatility.
Stock picks: TVO, ASK, TTW, BTS, VNG and INTUCH.
Property fund: POPF, CPNRF, SPF and TFUND.
