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Direction of Thai stock market relies on direction Saturday rally takes, say experts

Sep 19. 2020
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By The Nation

Experts are advising investors to monitor the political rally on Saturday (September 19), because the direction Thailand’s stock index takes will depend very much on the severity of the situation.

Apichat Poobunjirdkul, Tisco Securities senior director for strategic analysis, said the domestic political situation has always had an effect on the Thai stock market.

He said that though government will not initially harm protesters, the result will depend on how far the protesters go.

"We don’t expect the index to fall below 1,250, and it even has the chance to rise beyond 1,300 if the protest wraps up quickly. However, there is a chance that the index will drop to 1,200 if the situation escalates or is prolonged,” he said.

“The student-led protest on Saturday and the Parliament meeting on September 23-24 will have an impact on the direction the Thai stock market takes, while the US presidential election, US-China tensions and Brexit negotiations will cause market volatility over the next two months.”

He said he expects the index to move between 1,250 and 1,280, and is advising investors to buy stocks for investment as the current price-to-earnings ratio has risen to 16-17 times from 15-16 times at the end of last year. Hence, he believes the index will move between 1,281 and 1,297 in the fourth quarter of this year, and rise beyond 1,300 in the first quarter of 2021.

He also added that the Thai stock market is likely to face a Fibonacci retracement technical correction at 1,269.

“We recommend buying stocks that pay dividends of more than 4 per cent per year and whose profits will rise later in the year,” he added.

Therdsak Thaveeteeratham, executive vice president for research at Asia Plus Securities, said investors are closely monitoring the political situation and the index will probably fall below 1,270 if things escalate. However, he said, the index will move between 1,270 and 1,300 if the situation is not severe.

"Currently, there were two factors pressuring the index – local political unrest and the Covid-19 outbreak," he said.

Meanwhile, Nuttachart Mekmasin, assistant managing director for Trinity Securities, said he does not think the Saturday rally will get out of hand, though protesters will continue pressuring the government.

“The Thai stock index will fluctuate in a narrow range if protesters continue pressuring the government peacefully, but it will fall sharply if the situation gets out of hand. Hence, this is the time to buy shares because listed companies’ performance is expected to improve next year,” he said.

He sees the index resistance level at 1,310 and the support line between 1,270 and 1,250, adding that the index movements will depend very much on whether or not the situation escalates.

He advised investors concerned about the political situation to purchase stocks that will escape the political impact and are not involved in country’s supply chain, such as food, electronics and rubber products produced for export.

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