Marketwatch

Thanawat Patchimkul
Head of research
DBS Vickers Securities (Thailand)

The Thai equity market’s performance year to date (YTD) has been quite sluggish, with gains of only a few percentage points and the bulk of shares changing hands among local players. Local institutions bought about Bt50 billion net of Thai shares to date, while individual investors sold almost a similar amount. Foreign investors have not been active in the Thai market so far, without any clear intentions of adding or reducing positions in this market.
In contrast, the Indian stock market gained over 20 per cent YTD, with the rupee reaching a two-year high last week (+6.6 per cent YTD). Thanks to the country’s improving economic stability and good progress in rolling out reforms, foreign portfolio inflows into India were impressive at US$26 billion (Bt865 billion) YTD. Foreign direct investment (FDI) into India was also commendable, coming in at US$22 billion for May 2017.
Thai investors could invest in the Indian market via the iShares MSCI India ETF, a US-listed exchange-traded fund with an asset size of over US$5.4 billion. The fund has gained about 29.5 per cent YTD in USD terms. Alternatively, investors can consider the Singapore-listed iShares MSCI India Index ETF, which is also denominated in USD but, unlike the iShares MSCI India ETF, is traded during Asian trading hours. The portfolios of the two ETFs are quite similar as they track the MSCI India Total Return Index.

Tisco Securities 
Political uncertainties, coupled with expectations of lacklustre second quarter earnings, are likely to put more pressure on the Thai market in August. However, once the mourning period ends in October and we see more progress on new elections, the SET should start to re-rate towards our 1,650 year-end target.
We expect most companies under our coverage to report weak earnings, both year-on-year (YoY) and quarter-on-quarter (QoQ). Bank earnings fell 10 per cent YoY and 12 per cent QoQ, mainly due to high provisioning expenses. We also anticipate lacklustre results for sectors such as construction materials, downstream energy, petrochem, telecom and insurance. Key reasons are lack of one-off items, lower consumption, inventory losses from declines in crude oil prices (for energy) and higher OPEX (for select telecom operators).
The “mixed-bag” sectors include property (lack of government stimulus versus gain from asset sale to LH REIT) and hospitals (fewer Middle East patients due to Ramadan versus sale of BH shares). Hotels should report a YoY decline in earnings due mainly to lack of extra items but this is partially offset by lower interest costs (Centel) and improved Thai Revpar (high end segment, for example Mint). Among the few bright spots, we expect utilities to report +17 per cent YoY growth in second-quarter earnings mainly from FX gains. Similarly, we expect both PTT and PTTEP to report QoQ growth thanks to FX gains.
Political risks could rise in August once the court verdict for former PM Yingluck Shinawatra is announced. Meanwhile, the royal funeral ceremony, coupled with the possibility of heavy rainfall in the August-October period, could further dampen consumer spending. Accordingly, we continue to stick with defensive names with company-specific catalysts including INTUCH, DIF, AOT, GLOW, EGCO, AP, CPALL, CK, UNIQ, SCC, BBL and KTB.

Trinity Securities
Research Department
The SET Index will likely move sideways in a range of 1,540-1,600 points this month.

This month, the key support |factors include: 
Good signal of capital movement particularly in the bond market; 
Likely continuation of monetary easing of central banks across the world, mid low inflationary pressure and near-lack of confidence in the US President and Congress. The USD will likely remain appreciating in the short term, which is good for emerging-country stock markets; 
Still-high crude prices, which support the energy sector to continue outperforming the SET Index. 

The key factors limiting the |SET Index’s upside include:
High valuation of the Thai bourse at forward PE of 15.6 and 14.1 times for 2017 and 2018, respectively. After second quarter results, the market EPS estimate is not raised; 
Weak domestic demand and liquidity, reflected by very low inflation and M2 growing at nearly its low since 2008, with negative sentiment from floods for farm income and consumption in the South; 
Likely noises for risky asset investment if conflicts between North Korea and the world’s major powers heighten. 

Investment strategy: Hold these following groups. 
Utilities: BCPG & WHAUP as top picks for growth, and GLOW, EGCO, RATCH for high dividend and interim dividend payment. 
Necessary products and services: consumer staples (CPALL, BJC) and healthcare (BCH, CHG) which are resilient to low inflation. 
Refinery: stock picks: BCP, SPRC, TOP for expected interim dividend. 
High dividend stocks with limited downside and likely positive |sentiment if the MPC cuts the policy rate in its August 16 meeting. Stock picks: KKP, GLOW, QH, TVO, SIRI.