Thailand's stock market is projected to decrease over the next 1-3 months, with the net profit of SET-listed firms bottoming out this quarter from the Covid-19 impact, say analysts.
As the pandemic has taken a toll on the revenue of listed companies, a decline in net profit will be a major factor pressuring investment sentiment the next three months, said Isara Ordeedolchest, head of research at Krungsri Securities.
The net profit of listed firms is anticipated to reach its lowest point in the short term, said Mr Isara.
The aggregate net profit of 671 SET-listed companies was logged at 98.5 billion baht, down 60.5% year-on-year, with the energy, petrochemicals and utility sectors taking the brunt from the crude price war between Opec member countries and Russia, as well as Thailand's economic slowdown.
Total revenue was registered at 2.68 trillion baht, down 4.3% year-on-year.
He said the most important factor to watch in the next 2-3 months is whether a second wave of the pandemic requires more city lockdowns, affecting the economy and the performance of listed companies.
However, if the virus spread can be controlled in Thailand, factories can expand production and hotels can reopen, marking a turning point that would rev up investor confidence in the second half, said Mr Isara.
These developments will also point towards how the economic recovery is progressing, similar to an increase in the production index in China, he said.
Liquidity in the financial system will remain high due to monetary stimulus being injected into the system from various central banks, aimed at awakening their respective economies, said Mr Isara.
The SET index has rebounded by about 20% from its lowest point in March at 969 points to hover around 1,300 points at present, while Thai stock prices are quite expensive now compared to regional peers, he said.
"If the inflation rate remains low or at -1% to -2%, stocks will continue to perform well", he said.
Poramet Tongbua, investment strategist at Bualuang Securities, said analysts will upgrade Thailand's GDP growth and the net profit projection of SET-listed firms in the second half if the pandemic situation improves.
For Thailand, which seems to have controlled the Covid-19 outbreak, it is expected the business sector will recover in the second half, said Mr Poramet.
