Market View

Therdsak Thaveeteeratham
Executive Vice President - Research
Asia Plus Securities
Fund flows from foreign investors and proprietary trading began moving into the Stock Exchange of Thailand in mid-February, boosting the SET Index by more than 120 points. The index surpassed 1,400 points, up from 1,280.
Since February 15, foreign investors have been net buyers of Thai stocks worth a total of Bt23.4 billion, and proprietary traders net-bought Bt10 billion worth.
In 2015, listed companies’ combined net profits were lower than expected at Bt655 billion or Bt68.65 per share, leading the current market PER (price-to-earnings ratio) to exceed 19 times. This year’s profit estimate is Bt90.25 per share or market PER at year-end of 15.63 times, which is the upper line.
The Thai economic recovery has been slower than expected, and research houses cut their estimates for growth in gross domestic product. Recently the Bank of Thailand’s Monetary Policy Committee revised down its estimate for this year’s GDP growth from 3.5 per cent to 3.1 per cent although the policy rate was left unchanged. Other research houses project GDP growth of less than 3 per cent.
Last week’s terrorism in Belgium has not had much impact on money and capital markets. However, in the long term, it could hinder Europe’s economic recovery.
Amid unchanged fundamentals or slow improvement, share prices, which are influenced by the amount of capital, could move higher from their fundamental values. The issue is how much capital will flow into the Thai stock market. Based on expectations for US dollar appreciation and higher risks from terrorism, less foreign capital will likely move into emerging markets.
Meanwhile, with net accumulative purchases of Bt18 billion through proprietary trading since the beginning of this year, there could be more chance for profit-taking.
Local institutional investors are expected to be net buyers after net sales.
This is also the last week of the first quarter of 2016 and there could be a buying spree for window-dressing.
The investment strategy is to buy selectively once prices weaken. Stocks should be picked that have clearly positive factors. For example, the government will launch a stimulus for spending during the Songkran Festival, which could benefit retail stocks like TNP (Thanapiriya; fair value Bt1.9), a large retailer in Chiang Rai, and JMART (Jay Mart; [email protected]) with a much more laggard price than COM7.

Chaiyaporn Nompitakcharoen
Head of Non-institutional Broking Group
Bualuang Securities
The Stock Exchange of Thailand gained a moderate 1.3 per cent over the previous week, mainly driven by mobile-telephone operators on anticipation of the re-auction of fourth-generation wireless broadband licences a few months from now.
A 4G licence relinquished by Jasmine Mobile Broadband is to be re-auctioned, with the minimum starting bid similar to the Bt76 billion – which had given JASMIN the first auction – is likely to be ignored by the current operators. That means competition among the existing mobile operators will be relative to the prospect of a newcomer getting in.
Crude-oil prices having pushed oil-related share prices up, but doubt remains given a persistent supply glut. Talks between the Organisation of the Petroleum Exporting Countries (Opec) and Russia to curb capacity will be difficult to maintain while Iran aims to raise its crude-oil production to the levels seen before the embargo over its nuclear programme.
Our research estimates that total first-quarter earnings will expand by 9 per cent year on year, driven by extraordinary booking, while growth of core operating profit may become stagnant. So we believe that the SET’s upside will be curbed at 1,420 points, with forward PER (price-to-earnings ratio) of 14.9 for 2016.
Our stock picks are GFPT, RP (Raja Ferry Port) and SAWAD (Srisawad Power 1979).

Prakit Sirivattanaket
Vice President
Kasikorn Securities
The US dollar appreciated for five consecutive days. Recently, the US currency has strengthened by 0.5 per cent. US dollar repurchase prompted sales of other risky assets and commodities at some level.
The price of WTI (West Texas Intermediate) crude oil dropped below US$40 per barrel. The price of platinum fell more than 3.5 per cent for two consecutive days, for the sharpest sales since January. The price of gold also slipped by 2.7 per cent to $1,216 an ounce for two days.
The US dollar buyback came from market expectations of the US Federal Reserve raising interest rates again after hints of a rate hike in April. However, this needs close monitoring.
With regard to this week’s SET Index, we should keep an eye on investors’ movements for SET50 Futures, particularly S50H16 and S50M16. Initially, foreign investors have not given severely negative signals. Despite their “long” position of more than 120,000 contracts for SET50 Futures from the beginning of this year, there remain no signals of a large number of net sales.
A rollover of investment from S50H16 to S50M16 was seen for three days last week, reflecting a lower number of outstanding S50H16 contracts by 14,000 contracts from March 21-23 and a closely higher number of outstanding S50M16 contracts by 12,400 contracts.
Besides, the spread between S50M16 and S50H16 narrowed (less negative) from minus-11.4 to minus 9.2 points from March 15-23 (short S50H16 and open long position for S50M16). Such behaviour may indicate foreign investors holding long positions, and there could be a chance to see capital flow into the stock market for a while.