Investors nervous as charter vote expected to affect SET

If voters pass the referendum on what is hoped to be Thailand’s 20th constitution, foreign capital worth about Bt40 billion to Bt50 billion could pour into Thai stocks in the latter half of this year, said Apichai Raomanachai, deputy managing director for research at Apple Wealth Securities.
The SET Index is forecast to climb to 1,575-1,600 points, he said, adding that its current forward price-to-earnings (P/E) ratio of 16.4 times remained cheap compared with those of Indonesia and the Philippines at 17.30 and 20.50 times.
Kriengkrai Tumnutad, head of research at AEC Securities, projects the Thai bourse to move with high volatility this month with likely key impacts from the vote on the constitutional draft, bidding for three urban-rail lines, and new projects of the residential housing group, which could drive the SET Index in a range of 1,470-1,550 points.
Trinity Securities forecast the SET Index to ease and move sideways in a range of 1,470-1,550 points in August, while keeping an eye on the Bank of England’s meeting tomorrow, US economic indicators and Thailand’s poll.
However, if the voters reject the draft constitution, the index is expected to see market corrections to its support level at 1,480 points due to the likely delay for a general election currently set for late 2017, which could erode investor confidence, Apichai said.
He expects emerging stock markets to gain support from low interest rates and liquidity injection from the central banks of Japan, England and Europe. If the US interest rate remains unchanged until late this year, the SET Index is estimated to see low downside risks. He picks banking stocks like Kasikornbank (KBANK), Siam Commercial Bank (SCB), Bangkok Bank (BBL) and Krungthai Bank (KTB) from their possibility for credit expansion in the second half of this year, slowdown in non-performing loans and low price to book value of the banking sector.
Construction picks – Ch Karnchang (CK) and Sino-Thai Engineering and Construction (STEC) – could gain from construction of the mass-rapid-transit system and tourism, such as Airports of Thailand (AOT), Asia Aviation (AAV) and Bangkok Airways (BA).
Trinity suggests selling stocks when prices rise and buying when prices drop in the SET Index’ range of 1,470-1,550 points, while focusing on the groups with no sharp rises in prices. These groups include property, airlines and automobiles.
Kriengkrai of AEC Securities emphasises investment in companies with strong business models and expected high earnings improvement, highlighting airlines, alternative energy, hire purchase, property and beverages. The SET Index yesterday fell 15.11 points, or 1 per cent, to close at 1,497.51 points with trading turnover of Bt57.24 billion. Institu-tional investors showed net sales of Bt2.23 billion but foreign investors showed net buys of Bt72.58 million.