Beware of early selling spree in bourse
While this year's market fundamentals look better than in 2014, be careful of a selling spree in the early period of the year. The Thai bourse, based on its fundamentals - including the economy and corporate performance - is expected to be more satisfact
GDP growth: In 2014, Asia Plus’s research expected to see 0.8-per-cent growth in gross domestic product, as the economic mechanism, including household consumption, public investment and exports, could not work efficiently.
This year, GDP growth is projected at 3.5 per cent on the back of public investment of Bt2.4 trillion, private investment for the Asean Economic Community later the year, and the export recovery. The estimate is in line with the International Monetary Fund forecast for the world’s GDP at 3.8 per cent in 2015, compared to growth of 3.3 per cent last year.
EPS growth: In 2014, listed firms are expected to see overall earnings per share at Bt88.76 per share, down 3.14 per cent year on year due to record inventory impairment for consumer product-related industries after sharp drops in oil prices. The 2014 profit base is seen as lower than the normal level, and EPS is expected to rise 16.77 per cent to Bt103.65 per share in 2015.
Information and communications technology, food, commerce, petrochemicals, transportation and media are expected to see high growth.
LTF redemption: Based on Asia Plus’s research, long-term equity funds whose unit-holders hold at least five calendar years as of early this year will be valued at about Bt141 billion.
Statistically, LTF redemption averages about 33 per cent of the value that could be sold with tax benefits in the first quarter of a year. According to the above data, the redemption is expected to come in at Bt46 billion. However, it does not mean that there would likely be funds wanting to sell stocks to that extent, as it depends on each fund’s cash position in early 2015. Liquidity in the financial system: We expect higher demand for capital in the Thai economy in 2015. Commercial banks’ loan growth is expected at 8.5 per cent.
Foreign capital may not flow into the country this year as much as it did in 2014 after several countries’ lessened monetary easing, or easing in specific areas, which may lead to less capital moving out of those countries.
The US Fed’s likely rate hike in the latter half of 2015 may prompt capital to flow back to the US. With these factors, the Thai stock market is expected to gain fundamental support in 2015. Invest at a PER of no more than 16 times, which could happen in early 2015.
If the SET Index goes below 1,500 points, purchase stocks gradually.
Stock picks for banks are Krungthai Bank, TMB Bank and Kasikornbank; for ICT, Intouch Holdings, Advanced Info Service, Samart Telcoms, and Advanced Information Technology; and for property, Supalai.
