Thursday, August 13, 2020

SCBS forecasts 27% drop in share values of SET-listed companies

Jul 14. 2020
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By The Nation

SCB Securities (SCBS) has cut its forecasts for the Stock Exchange of Thailand (SET) Index and listed companies’ shares this year due to numerous negative internal and external factors.

The securities arm of Siam Commercial Bank has reduced its 2020 SET forecast from 1,450 points to 1,428, and its forecast for listed companies to an average Bt62.57 per share – down 27 per cent from 2019’s Bt86.19 per share.

However, SCBS expects share prices to recover next year by 28 per cent or Bt79.96 per share, said Sukit Udomsirikul, managing director of SCBS research group.

"The index lacks new positive sentiment, which can be seen from foreign investors' mass sell-offs totalling over Bt200 billion. As a result, the index is currently gaining support only from domestic individual and institutional investors, as well as the Super Savings Funds Extra [SSFX]," he said.

Among the many negative sentiments still pressuring the SET Index were concerns over a second wave of Covid-19, the ongoing US-China trade war, debt defaults by small and medium-size businesses, pending changes to the Thai Cabinet and economic team, and this year’s US presidential election.

"The government's move to reorganise the [Cabinet] economic team has triggered uncertainty among investors because the Thai economy will come under pressure if economic stimulus measures cannot be issued in the third quarter of this year," said Sukit.

"We expect listed companies' profits this year to drop because many companies are facing a decline in growth," he added.

"Meanwhile, the SET Index valuation is still high compared to other countries, so we expect the index to fall below 1,280 if there are more negative factors, such as a second wave of Covid-19."

He advised investors to invest in food, retail, transportation, ICT and defence stocks, such as BDMS, BEM, BTS, CPF, ADVANC and BCH.

"Also, we suggest investors buy BBL, ERW, IVL and HANA and hold them speculatively for three months," he added.

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