SET expected to move with volatility in 1,400-1,600 range next year
THE SET Index is expected to move with volatility in a range of 1,400-1,600 points in 2017 on the country’s sound economic fundamentals and the general election scheduled for late in the year, according to Apple Wealth Securities.
However, risks remain, with US President-elect Donald Trump’s economic policies that could prompt foreign capital to flee.
Apichai Raomanachai, deputy managing director for research at Apple Wealth Securities, said that what investors have to keep an eye on were Trump’s economic policies focusing on job creation in the United States and the US Federal Reserve’s planned interest-rate increases.
Trump’s stated policies include likely cuts to corporate and personal income-tax rates, a trillion-dollar infrastructure plan and renegotiations with the United States’ trading partners to narrow the US trade deficit.
Foreign capital may move out of emerging markets if the US economy stages a stronger-than-expected recovery, while more countries’ requests for exits from the European Union may occur if opposition parties win next year’s elections in France and Germany, Apichai said.
However, the Stock Exchange of Thailand will likely see positive factors from Thailand’s stronger-than-expected economic indicators, with this year’s current-account surplus of US$40 billion, relatively low public debts, and the rate of non-performing loans in the banking sector below 3 per cent, he said.
Investors will likely gain confidence late in 2017 from local political developments, including legal reforms and a democratic election after the military-drafted constitution passed the August 7 referendum, he said.
Besides, the Thai market’s valuations, with the current SET Index being traded at a forward price-to -earnings ratio of 14 times and earnings growth of 11 per cent, are cheaper than other stock markets in TIP (Thailand, Indonesia and the Philippines), he said.
The Philippines’ stock market is being traded at forward P/E of 15.6 times and earnings growth of 7.8 per cent.
Apichai said that given limited foreign sales after about Bt300 billion worth of foreign capital fled the Thai bourse during 2014-2015, the SET Index would likely see low downside risks if stock markets across the world move with volatility.
Apple Wealth Securities weighs on the construction, energy and petrochemical, and commodities groups.
