Thai stocks are expected to rally in the second half on the back of improving economic forecasts and the scheduling of a general election next year to usher in democracy, a senior analyst at Tisco Securities said yesterday.
"The SET index will shoot up at least 200 points from now," said Viwat Techapoonpol, deputy managing director at Tisco Securities.
Fund inflows to the Thai stock market will increase in the second half and continue into next year, he said, adding that stocks tend to rise six months before a major election with positive sentiment continuing for at least 1-2 months after the election is held.
Foreign investors have poured over 100 billion baht into Thai bonds so far this year, which has helped raise the baht to a near two-year high against the greenback.
However, investors have been buying Thai shares at slower pace than bonds, purchasing a net 13.8 billion baht in shares this year.
The benchmark SET index has inched up 1.4% to date this year, far below comparative gains seen in Indonesia (9%) and the Philippines (17%).
"The SET is the laggard of the group, so there is no reason why Thailand will not be an attractive investment destination in the second half," Mr Viwat said.
Positive factors underpinning the SET index in the second half include a rebound in domestic consumption, state investment in mega-infrastructure projects, an estimated double-digit growth of listed companies' earnings, and a brighter outlook for exports, he said.
If exports keep rising and economic growth meets expectations the SET index could reach as high as 1,600 points this year, experts say.
But the bourse may face downside risks from the US Federal Reserve's rate hikes that are expected next week and again in December, as well as the US central bank's plan to reduce its balance sheet.
Tisco expects the Thai economy to grow by 3.6% in 2017 and 3.8% in 2018.