MarketWatch

  THERDSAK THAVEETEERATHAM
Executive Vice President - Research
ASIA PLUS SECURITIES

The stock market continues its correction with sound fundamentals.
After an all-time high at 1,852.51 points in late February 2018, the SET Index has continuously made corrections which are expected to continue until capital inflows of foreign investors and local institutional investors increase. During February, rises in prices have been concentrated in only some stocks such as energy plays, while during the rises, foreign investors net sold Thai stocks. From early February of this year, foreign investors were net sellers of Thai stocks worth over Bt52 billion. Individual investors were net buyers. Such actions can result in profit-taking and prompt the SET Index into market corrections – as we have seen now.
Most fundamental factors remain positive, starting from a strong Thai economic recovery and estimated high base of listed companies’ earnings this year.
Thai GDP growth is forecast at 4.2 per cent in 2018, which will be driven by all economic engines including public and private investment, household consumption and international trade.
In 2018, listed companies’ net profit is expected to rise 14 per cent to Bt1.11 trillion. The profit was Bt982 billion, up 10 per cent YoY.
The SET Index is expected to see only short-term corrections, while having an upward trend in the medium to long term. Stock picks: BJC for high profit growth in 2018; INTUCH for high dividend yield and consistent dividend payment; and BCH for laggard stocks.

PRAKIT SIRIWATTANAKET
Vice President
KASIKORN SECURITIES

Global liquidity has not yet been lessened.
It's interesting that ahead of its recent meeting the ECB – which decided to put its benchmark rate on hold at 0 per cent – dropped its usual sentence: “We stand ready to increase the asset purchase programme (APP) in terms of size and/or duration”. The removal reflected the ECB’s prep to cease its asset purchases after extending it three times since the APP began in March 2015.
The ECB’s prep to cease its APP is expected not to change global liquidity this year. At the end of 2018, the ECB’s balance sheet is forecast to rise to US$5.77 trillion (Bt180.66 trillion). The size of the combined balance sheets of ECB, the fed and BoJ is estimated to reach $15.87 trillion, up 5.61 per cent YoY. Meanwhile, the size of the Fed, ECB and BoJ’s balance sheets combined is projected to decline significantly from the middle of 2019, which will give impact to liquidity and risky assets across the world. Markets have not given negative response on Trump’s steel and aluminium tariffs, given exemption for some countries. Dow Jones Industrial Estate rebounded 0.38 per cent and other regional markets rose over 1 per cent. Meanwhile, we continue monitoring likely retaliatory measures from both the EU and China, which have had some reactions already.
There remain uncertainties in other countries while positive local issues, particularly the general election, have been clearer. The NLA’s approval of the drafted bills on the election of MPs and Senate selection has drawn a clearer picture of the road to Thailand’s election, which is expected to take place no later than February 2019.
Historically, foreign investors bought Thai stocks when there was hope for an election and they set heavy sell-offs when an election was postponed. Therefore, if the election date is made clear, it’s believed that foreign investors will buy and make the stock market rebound again.