FRIDAY, March 29, 2024
nationthailand

SET faces challenges this year before riding funds influx in 2021

SET faces challenges this year before riding funds influx in 2021

An expert at Asia Plus Securities expected the Stock Exchange of Thailand (SET) to hit 1,500 points next year due to high liquidity and the return of foreign funds, but pointed out five negative factors that would pressure the index in the remainder of this year.

Asia Plus Securities' executive vice president of research, Therdsak Thaveeteeratham, expected listed companies' profit next year to average Bt72.51 per share from Bt56.65 per share this year, as the quarterly profit is expected to bottom out since the second quarter of this year.

He expected the SET to hit 1,450 points next year and 1,526 points if the Bank of Thailand's Monetary Policy Committee cut the interest rate one more time this year.

"The positive sentiment that would help boost the SET is high liquidity of Bt15.5 trillion, higher than the index market capitalisation of Bt13 trillion. According to previous statistics, the cash is likely to flow into the index when the deposits are higher than the index market capitalisation, especially when the interest rate is likely to stay at a low level for 1-2 years because the return on deposit was not high," he said.

"In addition, foreign funds are likely to return to the market after they continued selling until their shareholding in the Thai stock market fell to 25.8 per cent currently.

Meanwhile, large investors have opened 510,000 accounts this year from the previous 300,000 accounts which helped boost the price of small-cap shares."

However, he said the SET would be pressured by five negative sentiments:

▪︎ Second wave of Covid-19: This fear has caused several countries to impose lockdown measures and caused global stock markets to face correction in September.

▪︎ Domestic political situation: Investors should follow this factor closely because the past political rallies had caused the SET to fall by 6.2 per cent, while the rally organised by the Free People's movement caused the index to fall by 7.4 per cent.

▪︎ US presidential election: Going by trends in the previous three elections, the SET will fall one month before and after the election, but the index is likely to rise one year after the election. Therefore, investors should buy shares one week before the election when the market faces correction. If Joe Biden wins the election, cash is likely to flow into the US due to his policy to raise tariffs on US companies.

▪︎ SCG Packaging (SCGP) listing on SET: Eighteen mutual funds decided to sell large-cap shares to buy SCGP shares worth Bt23 billion. Meanwhile, SCGP would be listed in the SET50 or SET100 automatically, as its market capitalisation was around Bt140 billion to Bt150 billion, so Thanachart Capital (TCAP) and The Erawan Group (ERW) would be delisted from SET50 and SET100, respectively.

▪︎ SET's old short sales and ceiling/floor regulations: Various risks will cause more impact on the SET due to its old short sales and ceiling/floor regulations.

Therdsak added that the government's "Shop Dee Mee Kuen" (Shop and Payback) measure to stimulate domestic consumption would help boost shares in the retail group, advising investors to buy Central Retail Corporation (CRC), SPVI and Jay Mart (JMART) shares as their prices were currently cheap.

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