By Market watch
Despite positive news flow in recent days, including better-than-expected third quarter GDP growth of 4.3 per cent and the 21 per cent year-on-year jump in tourist arrivals in October, foreign investors show no signs of ending their November spree. Note that foreign investors have been net sellers of nearly Bt15 billion of Thai equities monthtodate. Investors are also concerned about a US rate hike at the Federal Reserve’s December 1213 meeting as well as the overhang on the telecom sector from spectrum auctions next year.
In mid November, the SET finished its SET in the City event and we expect more than Bt30bn investment from LTF and RMF inflows in the final month of the year. As we believe the SET index’s high valuation multiples should be maintained next year, we have raised our end 2018 SET target from 1,720 to 1,810.
For 2018, we anticipate four main stock market drivers: 1) an expected general election in November 2018; 2) increased public investment (from the Eeastern Economic Corridor project); 3) improving underlying economic conditions; and 4) higher commodity prices and weaker baht. These events/trends, should they materialise, should subฌstantially improve earnings and valuations for most SETlisted companies.
We also like a number of banks, petrochem and conmat stocks in terms of their relatively low valuations. Accordingly, we have added BBL, SCB, BAY and PSH to our model portfolio.